Inventory Management must be designed to meet the dictates
of the marketplace and support the company's strategic plan.
The many changes in market demand, new opportunities due to
worldwide marketing, global sourcing of materials, and new
manufacturing technology, means many companies need to change
their Inventory Management approach and change the process
for Inventory Control.
Despite the many changes that companies go through, the basic
principles of Inventory Management remain the same. Some of
the new approaches and techniques are wrapped in new terminology,
but the underlying principles for accomplishing good Inventory
Management activities have not changed.
The Inventory Management system provides information to
efficiently manage the flow of materials, effectively utilize
people and equipment, coordinate internal activities, and
communicate with customers. Inventory Management does not
make decisions or manage operations; they provide the information
to Managers who make more accurate and timely decisions
to manage their operations.
The basic building blocks for the Inventory Management
system and activities are:
Sales Forecasting or Demand Management
Sales and Operations Planning
Production Planning
Material Requirements Planning
Inventory Reduction
The emphases on each area will vary depending on the company
and how it operates, and what requirements are placed on
it due to market demands. Each of the areas above will need
to be addressed in some form or another to have a successful
program of Inventory Management.
