Thursday, October 17, 2019

Use of Supply Chain Management as a Method of Inventory Control Research Paper

Use of Supply Chain Management as a Method of Inventory Control - Research Paper Example Use of Supply Chain Management as a Method of Inventory Control The emerging role of supply chain as integral part of inventory control has become hugely relevant issue for businesses. Indeed, successful SCM not only improves productivity but also provides the business with long term sustainability in the highly competitive business environment. The fast transforming business dynamics, including rapid globalization, technology and diversity in product variety and short life span have all contributed towards tough market conditions (Lee, 2002). Thus, challenges of effective SCM, especially as a key method of inventory control, have become major issues to improve and improvise inventory management in order to optimize performance outcome and maintain competitive edge. Supply chain and its impact on inventory control Supply chain and inventory management are intrinsically linked to the wider goals and objectives of the business. Supply chain or the logistics can broadly be defined as ‘set of approaches utilized to efficiently integrate supplie rs, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements’ (Simchi-Levi, Kaminsky, & Simchi-Levi, 2003, p. 1). The various imperatives of SCM are mainly designed to meet the changing needs and requirements of the customers. The SCM therefore is network of activities that encompasses supply and delivery of raw materials for manufacturing goods and delivery of the finished product to the end customers. Inventory, on the other hand is collection of raw materials and finished goods which need to be used in future. The inventory control system helps to streamline the supply and demand of the products by making available the raw material and finished good at any set time for the manufacturers and the retailers. The inventory or stock maintained at different stages of production and distribution is important element of inventory control system that helps to assess the quantity and time when products need to be replenished with fresh stock or new stock as per the demand. The cost effective analysis of stock helps to anticipate demand and supply of products, both of raw material and final products. For example, fast moving products and products with short life are stored in forward warehouse and slow moving products, risky or costly products are placed at central warehousing as shipped or moved to the destination when required. Thus, delivery of product is fast through the warehouses where the inventory is strategically placed or stored. Inventory is used as key constituent in SCM to coordinate various processes in order to meet the challenges of time with high efficiency and timeliness. Consequently, various factors like time, availability of raw material, coordination with various linkages like suppliers, distributors, warehouse, retail outlets etc. become hugely critical iss ues that need to be incorporated for higher performance. Porter (1985) strongly asserts that efficient SCM is vital ingredient of value chain that facilitates business activities to gain competitive edge. In the current dynamics of contemporary global business, goods are highly sensitive to pricing and changes. Effective SCM enhances operational efficiency within and outside the firm to meet the challenges of the fast changing requirements of the customers. Moreover, increasing efficiency and cost

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