Inventory Management: A Compromise Between Production Efficiency And Control Of Raw Material Storage Costs

Inventory Management A Compromise Between Production Efficiency And Control Of Raw Material Storage Costs

The warehouse is the hub of the production process. The maintenance of warehouse stocks allows the planning and supply of the production, on the other hand, the immediate satisfaction of the customer’s needs.

An inventory management system is essential to make production efficient. Inventories are used to cope with sudden and unforeseen fluctuations in demand.

Inventory management is based on a compromise between contradictory needs: on the one hand the need to minimize the level of stocks to contain costs, on the other hand, the need to have sufficient stock to meet production needs and sales.

WHAT IS INVENTORY MANAGEMENT?

Warehouse stock is a certain quantity of an item that is accumulated to be made available and used in the future according to the needs of the production process. The stock allows you to create a flexible link between adjacent production steps.

Against a periodic supply of raw materials and semi-finished products, the use of inventory in the production process is continuous and the maintenance of a certain quantity allows to reduce the production cycle times and, consequently, the time between the order and delivery.

It is by maintaining stocks that the risk of stock shortage and stalling in the production process is minimized. Ensuring efficient inventory maintenance means having efficient production without interruptions or delays and allows you to increase the level of customer satisfaction by minimizing the time required to fulfil orders.

An inventory management system is a set of policies and controls that allow you to monitor how much is in stock, how much to maintain when to restock, and how much, for better inventory management, we recommend you consult the experts of CAC.

The inventory management system is the definition of purchasing methods aimed at minimizing costs while ensuring a high level of service to the end customer.

By inventory management system we mean all activities aimed at enabling the supply of raw materials and semi-finished products in the company to allow efficient execution of the production process.

These activities include purchasing decisions, inbound logistics, warehousing of goods, and inventory control. The optimization of each of these activities with the help of inventory management services will allow the creation of an effective and efficient inventory management system and the smooth functioning of the production process.

WHY IT IS IMPORTANT TO SET UP AN INVENTORY MANAGEMENT SYSTEM

The main benefit that will be obtained through an efficient inventory management system is the optimization of the cost structure of the company. This is mainly because raw materials, semi-finished and finished products stored in the form of stocks represent fixed assets for the

company.

If on the one hand, it is necessary to always maintain a certain number of stocks to avoid losing customer orders, on the other hand, stocks must be minimized because buying means losing liquidity, liquidity that could be invested differently.

To save your costs and ensure the smooth movement of goods during the production process, it is ideal to consult CAC and guarantee effective inventory control with their help.

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