Supply Chain Inventory Management

A supply chain consists of three parts – procurement of raw materials and semi-finished products, converting them into finished products, and distributing them for sale. In this context, supply chain inventory management implies that the inventory should be managed in such a way that the supply chain can function without any shortages or excess burdens of large supplies.

Supply chain inventory management starts with the chain of suppliers who supply raw materials and semi-finished products. A person who is managing the supply chain is supposed to forecast the demand and supply of various products of the firm; the inventory management is done accordingly.

If the forecast indicates a higher demand in the near future, greater supplies of raw material and finished products have to be procured. Also, the process must be completed in time and without resulting in cost overruns.

A crucial part of supply chain inventory management involves managing warehouses. It helps in the proper storage and transportation of raw materials to production units, as well as the distribution of finished products through a chain of retailers and wholesalers. Supply chain inventory management ensures that the finished products are delivered at specific locations according to the pre-determined schedule.

Keeping in view the dynamic state of markets all over the world, supply chain inventory management has become a crucial factor in deciding the overall profits of a firm. Poor supply chain inventory management could spell disaster for any company. The higher the inventory investment as a percentage of total assets of a company, the higher the damage caused by poor inventory management. To ensure that this does not happen, there are various software tools available in market to help in supply chain inventory management. They are cost-effective, easy to use, and expedite various processes involved in supply chain inventory management. Thus, they are increasingly becoming popular. One can get customized software to suit one's specific needs also.

Source by Eric Morris

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