Inventory and Supply Management
Supply chain management is the careful attention paid to the process that sees materials, information, and finances move from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management focuses on efficiently and effectively coordinating the flows of the supply chain process both within and between companies. Often, the main goal of supply chain management is to reduce inventory, thus resulting in better efficiency and reduced costs. Here are a couple of general descriptions of the inventory control problem:
Almyta Systems (2009) Overview of inventory control. Retrieved Feb. 21, 2009, from http://systems(dot)almyta(dot)com/Inventory_1.asp and http://systems(dot)almyta(dot)com/Inventory_2.asp
Since 1986, the Voluntary Interindustry Commerce Solutions Association (VICS) has worked to improve the efficiency and effectiveness of the entire supply chain. ... VICS is made up of companies who have proven that a timely and accurate flow of product and information between trading partners significantly improves their competitive position. It has been demonstrated that cross-industry commerce standards facilitate better customer service while reducing costs. VICS' participation with hundreds of small and large companies has established that the implementation of VICS' business processes and standards achieve excellent returns that go far beyond initial expectations."
The VICS Collaborative Planning, Forecasting & Replenishment (CPFR®) Committee has had as its mission:
"... to develop business guidelines and roadmaps for various collaborative scenarios, which include upstream suppliers, suppliers of finished goods and retailers, which integrate demand and supply planning and execution."
You can read a summary of their work here:
VICS (N.D.) Overview of Collaborative Planning, Forecasting & Replenishment (CPFR®). Retrieved January 10, 2014, from http://www(dot)gs1us(dot)org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=631&PortalId=0&TabId=785
Now let’s consider a real-world description of an application of forecasting to inventory control:
Murphy, J. (2002) Enabling its field sales managers to collaborate on forecasts allowed Coca-Cola Bottling Co. Consolidated to slash inventories in half while absorbing 150 new products. Global Logistics & Supply Chain Strategies—November. Retrieved Nov. 8, 2010, from http://www(dot)glscs(dot)com/archives/11.02.coke.htm?adcode=5
After reading these articles, reviewing information from the Background readings, and researching other sources on your own, prepare a 3- to 4-page paper on the following topic:
True or false: Coca-Cola's experience with inventory forecasting supports the principles set forth by CPFR. If so, how? If not, why not? Be sure to take a clear stand.
Assignment Expectations
Your paper should be from three to five pages. Take a definite stand on the issues, and develop your supporting argument carefully. Using material from the Background information and any other sources you can find to support specific points in your argument is highly recommended; try to avoid making assertions for which you can find no support other than your own opinion.
You will be particularly assessed on:
- Precision: Draw on a range of sources and establish your understanding of the historical context of the question. Carry out the exercise as assigned, or carefully explain the limitations that might have prevented your completing some parts. (Running out of time isn’t generally considered an adequate limitation.)
- Support for assertions: Use examples, citations (especially to the required readings), and elaboration to support assertions. Provide evidence that you have read the required Background materials.
- Clarity: Provide clear answers that show good understanding of the topic. Understand the module's purpose, and structure your paper accordingly.
- Breadth and depth: Make the scope of your paper relate directly to the questions of the assignment and the learning outcomes of the module.
- Critical thinking: Incorporate your reactions, examples, and applications of the material to business in a way that illustrates your reflective judgment and good understanding of the concepts. Read the Required Readings posted in the Background material plus others you find relevant. Providing informed commentary and analysis is vital—simply repeating what sources say does not constitute an adequate paper.
- Overall quality: Turn in a well-written paper whose references, where needed, are properly cited and listed. (Refer to the University guidelines (http://support(dot)trident(dot)edu/files/Well-Written-Paper.pdf if you are uncertain about formats or other issues.)
Inventory and Supply Management
Insert Name
Subject
Date
Institution
Introduction
Inventory control is a procedure that companies use to know which stocks to order and when and how to obtain them (Siefert, 2003). Stock controllers follow a set of regulations in inventory control. An inventory is good if it has low levels of stock. It allows supplies officers to order enough stock. Purchasing of stock needs a lot of care to avoid a disastrous outcome that could affect an organization. Manufacturing mistakes can have little effect in comparison to the errors in purchase of stocks.
Large organizations experience difficulty in movement of stock through its sites. A company needs to keep a good inventory records and set guidelines that identify the MIN and MAX value of an inventory item (Axsäter, 2011). When an item drops below MIN, the purchasing agents restocks to MAX. The inclusion of rules combined with the ingenuity of people gives best results of the company’s inventory.
The success of inventory control depends on several factors. They need to ensure data is on time and correct. Procurement teams can answer questions on which stocks to keep, when to make orders, and means of ordering. Implementing efficient models ensures that inventory control is possible (Kracklauer, 2004). Computers database, centralization and ease of use replaces the previous method of keeping cumbersome inventory records.
Inventory Forecasting
Understanding clients’ demands for goods and services helps a company to keep the right amount of stock. Inventory forecasting permits a company to automatically or manually forecast on demand for goods and measure the sales forecast (Supplychainbrain, 2015. The information on how demand for goods and services fluctuates enables the supply team to stock the most appropriate goods. This has to be correct because if the estimate can mean a company is either lack of stock or overstock. When there is an overstock in a company the supplier has a surplus, while lack of stock is loss of sales. A company remains competitive if it understands the demand. Predicting the consumers demand is vital to ensure efficiency in manufacturing, suppliers’ and retailers. The appropriate forecast on demand of products and services is significant in a company. Data mining is a tool for collecting information that aids in avoiding a company incurring costs of little or too much inventory.
A good sales estimate uses the sales and inventory history to find those sales and inventory levels or pertains that are infrequent patterns. The opportunities, tendencies, and impact of improved competition, emerging technologies and changes of promotional designs and new products identified in department, category and sub-category. Forecast sales increase tested against actual expectations to gauge what is achievable (Kracklauer, 2004). The process needs constant updates and adjustments made because it is dynamic. It needs to find the sales of a given month. An effective inventory starts with a developed sales forecast.
CPFR
A practice of business that includes smart multiple trading partners in planning and fulfillment of customer demand. CPFR relates sales, marketing and supply chain plans, and execute procedure to increase its availability while the costs of inventory, transport and logistics reduced (Diederichs, 2009). The purchaser and supplier collaborate to meet the demand of the client. In retail industry the seller and buyer participate in four cooperative actions to increase their routine. Strategy and planning enables making ground rules for establishing relationships. Demand and Supply Management estimate client demand and supply over the planning horizon. Execution a company purchases, the supplier ships and delivers the product, on receiving the product the company stocks and record the transaction and pay. In the analysis stage it checks on exceptional conditions.
Coca-Cola
The company is one of the largest bottling c...