Management of inventory Flashcards
what is purchasing
the buying of materials from the supplier
what is inventory
the stock items available to use in the production or finished inventor sale to the consumer
what is centralised purchasing
one order sent to the supplier for the whole org
what are the advantages of centralised purchasing
- specialised dept
- cost effective
- approved supplier
- range of suppliers
what are the features of effective inventory control
- a trained inventory clerk
- appropriate inventory levels set
- regular monitoring inventory levels for usage
what does an inventory clerk do
- make sure the inventory documents are filled in correctly and approved
- use inventory rotation so old products are used first
- appropriate stock conditions
what effect does appropriate inventory levels have on the inventory control
Prevent problems with over and under stocking
what happens with the regular monitoring of inventory
- a formulae that monitors and calculates the stock
- best sellers/slow moving inventory identified
- physical counting of stock is done as well as electronically to get an accurate figure
what are the different inventory levels
Maximum
Reorder
Minimum
Buffer
what is the lead time on the inventory level
the about of time it takes for the delivery to come after the reorder is placed
what is the buffer inventory
excess to use incase order levels are wrong
what happens if levels are too low
production may be delayed or stopped due to under stock
what happens if levels are too high
overstocking and money is tied up and cannot be used elsewhere
what happens if suppliers change their terms
new reorder levels and order sizes may be needed
why is regular monitoring done
to ensure inventory levels are still appropriate
what is the purpose of inventory conrol
- anticipate when inventory will run out
- make sure customer orders aren’t delayed
- overstocking is avoided
- inventory control clerk
what is JIT
Just in time, this involves
- frequent deliveries
- small quantities
- recieved just before it’s needed
what does successful JIT depend on
- reliable suppliers
- constant good quality supplies
- staff responsible for identifying when stock is needed
what is the advantages of JIT
- no funds tied up so can be used elsewhere
- reduced inventory holding costs
- can change in trends quicker reducing waste
what are the disadvantages of JIT
- production could be effected if transport issues occur
- more dependent on suppliers
- loss of bulk buy discounts
what are the features of a good storage area
- storage capacity should be bigger than needed
- provide security
- use FIFO (rotation)
- labelled shelves
what is centralised storage
stored in one area
what are the advantages of centralised storage
- improved security control
- lower storage cost
- greater efficiency using specialist staff
what are the negatives of centralised storage
- staff needing to travel to the storage
- cost of specialised staff
- difficult to meet certain needs for departments (CDT)
