1. Supply chain and inventory management Flashcards
What does supply chain management reffer to?
It reffers to the monitoring of raw materials, work-in-process inventory, and finished goods from the point of origin to the point of consumption.
What does supply chain execution reffer to?
Supply chain execution is concerned about the management and coordination of the movement of raw materials, information, and funds across the supply chain.
This process is done through a bi-directional flow.
What is inventory?
Inventory (or stock) describes the goods and materials that a business hold for the purpose of resale.
What is inventory management?
Inventory management reffers to the specification of the size and placement of inventory in order to protect against random disturbances like inventory shortages.
What is the purpose of inventory management?
The purpose of inventory mangement is to optimize important indicators and activities such as:
* asset management
* inventory forecasting
* inventory valuation
* inventory visibility
* demand forecasting
* quality management
* returns and defective goods etc
The goal is to determine/control stock levels within the physical distribution system.
Why do businesses need to keep inventory?
Inventories need to be kept to counteract for:
- time lags in the supply chain
- uncertainties in demand
How are inventories classified?
- Raw materials: used in making a product
- Work in process: materials that have begun their transformation to finished goods
- Finished: goods ready for sale to customers
What factors determine the optimum inventory level?
- amount of capital and financing available
- consumer demand and projected sales
- inventory carrying costs: ordering, financing, receiving, storing, handling, insurance, deterioration, obsolence costs, physical damage, tax expenses
- quantity discounts (discounts for making few larger orders instead of numerous smaller ones)
- storage space
