STUDENTS' CORNER - 148
The next driver of the supply chain we are going to study is
When we were discussing the ingredients of logistics we spent some
time on Inventory and we have dealt with the basic fats of inventory; however,
for contextual propriety, we will see briefly the aspects of inventory.
Managing to have all things you need for your product available for
use is the goal of inventory; here, ‘ to have’ is a very significant
phrase. To have in excess to the need is
unproductive expenditure and to have less, inefficient business. Pile of
inventory in disproportion to the need and lack of inventory when you need are
not good strategic stand.
Inventory includes all the raw materials you need for the production,
the finished products ready for distribution to the customers, and the
work-in-process, that is, incomplete products—all these come under inventory.
And the main objective of Inventory is, as already said, to keep all the
necessary things available in necessary quantities, to contribute to the
efficiency of the supply chain management.
An efficient supply chain makes the best use of its all resources like
human, technological and financial. The best use of resources implies minimum
cost at every level of commercial management like purchase of raw materials and
minimum time spent in every business-activity.
In other words, there is minimal wastage of the resources. It means the
cost of production as a whole is low thereby giving room for more profit.
Of course, there is
effective supply chain network also and both are not the same but
different. Again, there are three types of
inventory: Cycle inventory, Seasonal
inventory and Safety inventory. We will
begin our next session with the difference between the efficient supply chain
and effective supply chain; then we will move on to deal with the types of