Identify Opportunities

• Effective inventory management gives business managers a window into the operation of the business. The data collection component of inventory management provides valuable information that can be used to find opportunities for savings on purchases, periods of peak demand, eliminating unprofitable product lines, and focusing on product lines that sell well.

Objectives of inventory management and control

1. Minimizing the idle time of man and machinery

2. To provide optimal services to the customers

3. To keep the carrying cost at minimum level

4. To keep the blockage of working capital at minimum level

4 Categories of an Inventory Management Tool

When people talk about an inventory management tool, it is easy to be confused. There is an unlimited number of subjects that deserve discussion as an inventory management tool. They fall into four categories:

• - software,

• - hardware, (Servers, desktops, dumb terminals, RF devices, asset tags, RFID tags, scannable bar code label printers, and Point of Sale devices)

• - theoretical management models

• - audit systems.

9. Logistics Interfaces with Operations

• Manufacturing Length of production runs

Balance economies of long production runs against increased costs of high inventories.

• Seasonal demand

Prepare to accept seasonal inventory to balance lead production times.

• Supply-side interfaces

Stocking adequate supplies to ensure uninterrupted production now a logistics function.

• Protective packaging

Principal purpose is to protect the product from damage.

• Foreign & third party alternatives

Some logistics functions are being outsourced.

Production/Operations

Sample activities:

• Quality control

• Detailed production

• Scheduling

• Equipment Maintenance

• Capacity planning

• Work measurement and standards

Interface activities:

• Product scheduling

• Plant location

• Purchasing

Logistics

Sample activities

• - Transport

• - Inventory

• - Order processing

• - Materials handling

11. Explain the value-added role of logistics

Logistics is about creating value—value for customers and suppliers of the firm, and value for the firm's stakeholders. Value in logistics is primarily expressed in terms of time and place. Products and services have no value unless they are in the possession of the customers when (time) and where (place) they wish to consume them. Good logistics management views each activity in the supply chain as contributing to the process of adding value. If lit­tle value can be added, it is questionable whether the activity should exist. However, value is added when customers are willing to pay more for a product or service than the cost to place it in their hands. To many firms throughout the world, logistics has become an increasingly important value-adding process for a number of reasons.