** Sagar Sandesh is now published as BI Weekly E-paper and is being released on Every Monday and Thursday**


If you satisfy your customers,   be they that purchase your finished products or those who supply raw materials to you or even the warehousing personnel that stock your products and all those down the line at every significant phase of the business process, then you are effective. Of course within and without the company, all your stakeholders feel satisfied with your service and operations. Your stakeholders give or get what is required and when required and how much is required.  To give a good example taken from the college curriculum, if you a UG student,  you are considered effective if you complete your study successfully within three years ---in the West, it is said in many universities, it is a four-year course--- no matter how many times you failed and then passed within the stipulated span of time. You do right things: you complete your three-year programme in three years irrespective of failures in one or many semesters.

We have already discussed in our earlier sessions the two very important qualities required for successful supply chain management: Efficiency and Responsiveness.  Absence of any one of the two will end up in failures in supply chain management.  An insightful strategic balancing of the two in all the operations ensures sustainability to the supply chain.

Some experts point out that if efficient operations fail to satisfy the customer, it indicates some defect in quality of service or of the product; in such circumstances, the operations may be efficient in terms of economical management of the resources but it is considered not effective in its goal.  The skill lies in the capabilities that use fewer resources—efficient--- without any compromise with quality—effective. Where efficiency and effectiveness blend into one another, there the business is guaranteed of successful continuity, of assertive sustainability.

Now let us look into the types of inventory.

Generally experts talk about the following as types of inventory: raw materials, Work-in-process (WIP), finished goods, transit inventory, buffer inventory, anticipation inventory, decoupling inventory, cycle inventory , MRO Goods inventory and theoretical inventory.

Let us see now about each type of inventory briefly beginning with raw materials.

Raw Materials

All the items that are used in manufacturing a product are raw materials. For example, wood is raw material for furniture; the manufacturer converts wood into furniture. Wood undergoes a change to reach the level of a finished product, furniture like a chair or a table. Or, if you buy chairs and sell them, for you chair may be considered raw materials for you. If you manufacture a chair, then, for you wood is the direct raw material.   When you purchase some things which may be even finished products like nuts and bolts, and even engines, they are considered as raw materials for you.

Naturally occurring substances without being subject to any chemical changes are generally looked upon as Primary raw materials.  Any item that you use to produce your product is essentially raw material for you.

We will move on to the next type of inventory in our next session.

Copyright © 2020 PORT TO PORT - Shipping Services Portal ( Sagar Sandesh ). All rights reserved.

Follow Us