Financial Impact of Integrating Supply, Inventory and Demand on Supply Chain Management for Manufacturers - Research Paper Example

Inventory to a common consumer can be described as a list of all items owned by a business firm or owner. Recently, its definition has taken a different twist and gone beyond the traditional definition of the general merchandise ready to go to the shelf for sale and now encompasses raw materials, work-in-process goods, and completely finished products which are considered to be part of business assets that are ready or will be ready for sale. It represents one of the significant assets that most business entities have because its turnover represents a significant source of revenue and subsequent earnings for the firms/companies stakeholders since its sale is the profit a company is always looking for.

With this definition, inventory has a substantial financial impact on business and manufacturers' performance and their associated supply chain management process. Inventory management can be transformed into information that can stimulate/change supply chain management processes to be more dynamic and responsive to the market needs. Supply chain management comprises the planning and management of all undertakings involving sourcing and procurement, conversion, and all management activities. It also takes into account coordination and cooperation with channel partners.

Supply chain management integrates supply, demand, and inventory management inside and outside a firm (Jaber, 2009). Different approaches are used in integrating; suppliers, manufacturers, warehouses, and distribution centers. This approach ensures that product is distributed in their correct amount, correct points and at the right time. In addition, it also comprises network facilities that provide component parts and raw material that are used to process the final product. It also ensures that the products are available to the consumer who requires them.

The main aim of supply chain management is to maximize profit while minimizing cost and, also making full use of all assets. Supply can be said to be the number of goods or services that suppliers are willing and capable of bringing into the market at one given time to be sold at different prices other things held constant (Jain, 2004).