Inventory Management 101

Inventory Management 101

By Stacey Spicer

Inventory management within a business can carry many definitions but has a singular goal; to allow the business to remain profitable and competitive.

Inventory refers to the materials that a business holds for production and resale. Management refers to the process of controlling those materials by utilizing a collection of tools. At CommTech, we utilize a combination of Economic Order Quantity (EOQ) and Just-In-Time (JIT) principles. The purpose of EOQ is to reduce inventory on hand and still maintain the amount of material required to meet customer demand. The JIT principle is applied to materials considered to be specialty items and/or costly.

The key players in managing inventory are production and purchasing teams. Solid communication between teams is imperative to successful material management. While inventory software can provide data based on purchases (material in) and sales orders (material out) the changes that happen between those ins and outs won’t be recorded unless they are communicated. As a custom manufacturer, changes can happen during the manufacturing process, and often do. Building rapport with one another and regular check-ins between teams are also tools to consider and should not be overlooked.

By utilizing the appropriate tools and knowledge, regularly reviewing data, and maintaining interdepartmental relationships we can continue to contribute to the overall goals of profitability, while remaining competitive.

 

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