Managing Supply Chain Inventory: Pitfalls and Opportunities

Ordering processes, such as order batching, can also contribute to thebullwhip effect. Organizations may accumulate larger orders before processing them in an effort to reduce costs and create transportation economics. They may also wait to place larger orders to benefit from lower prices offered during a promotion. Demand forecasting manipulation is another cause. By padding the forecast to compensate for possible errors, the organization loses sight of true customer demand.

Abstract —There are some complex and compelling challenges that global manufacturing industries should face, which includes price fluctuation, supply-chain inefficiencies and increasing customer expectations. In order to meet the demand of this economic environment, manufacturers need to find innovative, smarter ways to face those challenges. Thus, the efficient inventory management becomes urgent to manufacturers and it could help improve profitability and increase customer satisfaction. This paper aims to talk about what inventory management is and its importance, what problems inventory management might have and how to improve inventory management efficiency.

Supply chains are networks of organisations, information, technologies, activities and resources involved in the movement and conversion of physical goods or services from suppliers to end consumers. These different organisations are interlinked by physical, information and monetary flows. Organisations create value by transforming raw products into finished goods or repositioning of resources thru space and time, which is based on networks of supply chains. Both ways, it involves the movement and conversion of physical goods and information throughout supply chains across the world. Therefore organisations and supply chains are closely interlinked in the creation of value for its customers. Manufacturing firms produce goods for

Reorders are placed at the time of review (T), and the safety stock that must be reordered is:

B. b. Perfect order measure/fill rate: This method measures the error-free rate of each step in the supply chain. Error occurs when the customer has an unsatisfactory experience with the power tool they purchased because of errors and delays in the supply chain. The complexities of an extended supply chain make the odds against fulfilling a perfect order challenging.

A Supply Chain (SC) is an integrated process where involves various parties who are directly or indirectly working together to fulfil a customer’s demand. These parties can be manufacturers, suppliers, transporters, warehouses, distributers, retailers and end consumers. The functions of the SC cover a variety of areas, such as R&D, information flow, marketing, finance, distribution, operation, and customer services.

In the San Diego distribution center (DC) information flow example, dealers not being notified automatically of order status would be classified as

A distribution chain also known as value chain can be described as a set of interdependent organizations or businesses involved in making a product or service available, from producer to end customer (Kotler, et al., 2012).

The allocation of capacity among our suppliers was mainly due to the lead times and unit costs. We placed a larger order with Far Far Away in January because the lead time was four months and we would have received it by the time the sales season started in May. The unit costs were also cheaper which meant we could order more. We placed a smaller order with Pretty Close in April due to the zero month lead time, and the unit cost was more expensive. In the last two years we decided to adjust the order capacity for each model depending on if we overstocked or understocked in the previous year. We ordered less of the product from Pretty Close so we could have more capacity to order more or less if need be after we ordered the production

Generally, most of the inventory costs are not always fixed due to uncertainty of competitive market. In the existing literature, it is found that several researchers have worked on uncertainty considering inventory parameters as fuzzy valued. In this work, we have represented the inventory parameters as interval. Using this concept, we have developed a two warehouse inventory model with advanced payment, partial backlogged shortage. Due to uncertainty, this problem cannot be solved by existing direct/indirect optimization technique. For this purpose, different variants of particle swarm optimization technique (viz. PSO-CO, WQPSO and GQPSO) have been developed to solve the problem of the proposed inventory model by using interval

2. Discrepancy in Inventory – Rick reviewed at the manufacturing and warehouse operations. He found that floor workers did not record the defective components in the system correctly. He organized training classes for all workers and also increased the physical inventory count frequency from once in every 15 days to weekly. This will help to reduce the inventory discrepancy and increase order accuracy.

sales, this explains that most of orders are not cancelled or affected by a return policy.

A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter (Porter, 2013)

4. In a service supply chain, the (explicit) cost of information is higher than in a product

Harley Davidson’s success with the implementation of JIT had a lot to do with the fact that when JIT was put into practice, process problems could no longer be hidden by costly inventory that helped to meet ship dates. The inefficiencies in the processes were quickly identified and solved.