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Inventory management - Term Paper Example

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Center of discussion in this paper is inventory management as the key pillars of operations management. It aids in reducing business costs and lead times, while increasing operational efficiency. Inventory management is therefore an important function of operations management…
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Download file to see previous pages The intention of this study is operations management is the oversight function for the process of production and distribution of goods and services. Operations management is mainly concerned with the organization of tasks in such a way as to attain specific predetermined goals. These involve the production of goods and services. The production of goods and services can be described as the passage of raw resources known as inputs through a process to get finished goods and services known as the outputs. Inputs include information, raw materials, labor, capital and fixed and variable assets. Outputs include products for other processes, final products or services to clients. Functions within operations management include planning, setting goals, staffing, directing, controlling and organizing. An operations strategy is a well laid out, consistent and achievable set of targets, and should be related to the market and overall organizational strategy. Inventory is associated with functions such as storage, which is related to the need to keep inventory items safe and cycle, which describes the amount of stock required to be maintained at a time. Other inventory functions include fluctuations which describe contingency stock required at any time to cover unexpected shortfalls. Transportation and service encompass the movement of stock items into and out of the organization and their required maintenance. Inventory can be categorized into raw materials, work in progress or finished goods. Raw material is stock intended for the production of goods and services. Work in progress is stock that is currently undergoing processing but which is yet to be fully processed. Finished stocks refer to goods ready for sale to the end consumer and include packaged goods. Other stock categories include consumables such as office stationery and machinery spare parts that are not directly attributable to the production process. Different organizations will hold different stock varieties and quantities depending on the particular production and processes that they are involved in. While a manufacturing company for instance will hold both stocks of raw inputs and finished outputs, a supermarket will only hold stocks of finished goods and consumables (Donald & Waters, 2003). 2.2 Inventory supply management Inventory moves into and out of an organization frequently. All organizations at some point become customers, while at other times they are simply suppliers. As such, it is important to consider the handling of stock in transit. This effectively introduces the functions of the supplies department in stock management. The supply chain represents activities and organizations through which inventory passes as it heads towards its final destination. Supply chain management is an oversight function on the channels of inventory flow. Inventory supply chains can be described according to their length or breadth. Length of a supply chain is when a stock item has to pass through many suppliers before reaching the final consumer. One may for instance buy milk directly from the farmer or through a broker or from the supermarket. In the first example, the length is short as the milk does not have to pass through many people before reaching the final consumer. Breadth refers to the channels that an inventory item uses on its way to the consumer. A person can for instance get milk from the supermarket, shop, shopping mall or even from the farmer (Donald & Waters, 2003). A smooth supply chain function ensures that the business gets the right goods, in the right ...Download file to see next pagesRead More
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