Uses of Inventory Management

Name: Uses of Inventory Management
Author: Sergio Lopez

Learn some uses for inventory-management concepts.

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Course: On-Demand

(upbeat music) Inventory is an asset that can boost an organization's inherent value when managed correctly. The following lessons will cover how inventory management works with the supply chain, how it can benefit operations management, how it can be considered for small businesses, and how it is relevant to e-commerce. Inventory as a raw material, component, work in progress or finished good will flow through a supply chain, but because of multiple factors, a mismatch occurs between the different inventory needs of supply chain stakeholders and between the various supply and demand areas. This inconsistency is not necessarily bad because the manufacture and consumption of goods will never match exactly. To illustrate this, let's imagine an overseas toy manufacturer. They must produce toys months in advance to supply the market for the holiday season. This means that the inbound side of the supply chain for these toys must start gearing up very early in the year, usually around spring. In the case of a plastic toy, the plastic resin manufacturer must have the needed resin early enough for the toy manufacturer to make toys. The toy manufacturer must produce the toys considering the lead time to transport the toys overseas to the toy retailer's warehouse. The retailer must transport the toys to the stores in time for the holiday season. So the supply chain pipeline fills up on the inbound side in anticipation of holiday sales. All of this happens even before selling one toy for the holidays. Manufacturers need to decide how many raw materials or components to buy and how many SKUs to produce. Retailers need to choose when to purchase toys and how many in order to be ready for the holidays. The supply chain must hold the different inventories, otherwise known as cycle inventory, and all parties involved must be prepared to move the inventory into the next stage of the supply chain. To determine how much of each type of inventory should be held, the cost implications as well as customer satisfaction must be considered. Having too many finished goods in the retail store can be costly, but it can also improve overall customer satisfaction. A happy customer may be one that is more likely to shop at a store again. The supply chain is an important aspect of good inventory management. With the proper management of the flow of goods, the stakeholders will remain happy. Supply chain flow planning is done through a concept called sales and operations process, or S&OP. The purpose of S&OP is to include marketing strategies with customer demand information to forecast future work. It is essential to have accessibility to the various inventory components throughout the supply chain. Additionally, having customer sales information accessibility improves the forecast to a point where the goods flow through the supply chain with minimal issues. Imagine multiple warehouses and manufacturers along a supply chain highway. The first warehouse holds all the raw materials or components for the finished good. As required, the parts move from the raw materials and components warehouse to the next warehouse or plant, changing to a work in process along the way. As the materials move along the highway, they eventually end up in the retailer's warehouse. Inventory management monitors the processes while inside each warehouse or plant. Supply chain management monitors the larger supply chain. In this scenario, inventory management is a component of supply chain management.

Beginner Provider : Sergio Lopez 5 Lessons · 12m in Arabic, German, English, Spanish, French, Portuguese, Chinese

Course Description

Inventory-management concepts do not operate in a vacuum. Companies must use them to improve their tracking of inventory assets. These lessons describe the flow of inventory through the supply chain and what cycle inventory is in relation to the supply chain. You’ll also learn how sales and operations process (S&OP) tracks customer demand. We’ll also cover the rise of e-commerce and third-party logistics (3PL) companies.

What You'll Learn

Learn how proper use of inventory management techniques helps operations management and the greater supply chain
Define cycle inventory in relation to the supply chain
Discover the importance of inventory value and its effect on the sales and operations process (S&OP)
Understand how inventory management is important to small businesses
Learn how inventory management helps a company grow its e-commerce business
Trace the flow of inventory through the supply chain

Key Takeaways

Inventory-management concepts do not operate in a vacuum and must be used by companies to improve tracking of inventory assets.
The sales and operations process (S&OP) tracks customer demand.
The course covers the rise of e-commerce and third-party logistics (3PL) companies.
Inventory management connects operations management with the greater supply chain.
Proper inventory management supports both small businesses and the growth of a company's e-commerce business.

Frequently Asked Questions

What topics does this course cover?

It covers the flow of inventory through the supply chain, what cycle inventory is in relation to the supply chain, how the sales and operations process (S&OP) tracks customer demand, and the rise of e-commerce and third-party logistics (3PL) companies.

Who can benefit from this course?

The course addresses how inventory management is important to small businesses and how it helps a company grow its e-commerce business, and how its proper use helps operations management and the greater supply chain.

What skills will I gain from this course?

You will learn how proper inventory management techniques help operations management and the supply chain, know the definition of cycle inventory, and understand the importance of inventory value and its effect on the sales and operations process.

What lessons are included?

The lessons are Inventory Management and the Supply Chain, Inventory Management and Operations Management, Inventory Management and Small Business, Inventory Management and E-commerce, and a Test Your Knowledge assessment.