Question

1- search the internet for recent news items (within the past year) Relating to inventory issues. submit a short paragraph describing what you found and explaining why it is important to the future of inventory accounting or management. for example, this can be related to technology, bar code, RFID, shipping, supply chain, logistics or other inventory-related topics that are currently trending.

2- Consider the following situation: Your family started a new manufacturing business making outdoor benches for use in parks and outdoor venues two years ago. the business has been very successful, and sales are soaring. Because of this success, your family realizes that the equipment purchased to start the business will not last as long as expected because the company has needed tonrun twenty four hour production shifts for mkst of the past year. there has been a lot of wear and tear on the equipment. the original useful lives And salvage values are not as accurate as your family had hoped. your aunt whi is the production manager for the family business has approached you because she is concerned about this issue, and she knows you have had an accounting class. what advice do you have for her?

Answer 1

Hi

Here are the answers.

Answer to Question #1. Future of Inventory accounting or Management.

Inventory Management in Future.

Inventory Management is both science and art. Prudent inventory management can cut costs and boost bottom-line. Profits are a measure of the operational efficiency and effective management.

Recent trends and advancements in inventory management makes an interesting learning. Gone are the days, when companies relied on manual count, maintenance of registers, stock taking physically and managing the inventory in expensive warehouses, employing hundreds and incurring huge costs, and ending up in disposing obsolete inventory as scrap and incurring huge costs. Inventory management involves both planning and execution. For decades of late, companies relied on Bar-code data collection, wireless system directed material moves to better inventory control than paper based/manual oriented systems. While Bar Codes were useful for transactional visibility, RFID provided for real-time visibility.

The latest trend is Real Time location system (RLTS) relying on technology which spans multiple technology inputs including ultrawideband(UWB) beacons, Bluetooth low energy (BLE)beacons, and Radio Frequency Identifications (RFID).

Latest innovation is Ware House Management System (WMS) using RLTS(Real time location system) through which, one can attain better visibility and fully dynamic. RLTS is more reliable and offers split second solutions targeting accurate location and within 10 centimeters. Two important considerations for implementing RLTS are , availability of active tag, physically fit attached to the things , second being that asset or inventory in real-time must outweigh the cost of tag and supporting infrastructure. RLTS is very useful in perishable goods industries, as it can track temperature changes, shipment of high value goods, or damage caused in shipment, due to mishandling, delayed transshipment.

Modern inventory management systems and the Cloud have revolutionized inventory management these days. Availability of SaaS (Software as a service) offering in the Cloud is impacting the management of inventory in many ways. Cloud based management is affordable, accuracy, easily accessible, use of Artificial intelligence and machine learning, Real time data base access and updates make it easy for companies.

The future of inventory management is SMART. AI and Bots, AI and Embedded intelligence, Integrating IoT, machine learning and block chain will help smart management of inventory in future.

Answer to Question #2

Material management plays a vital role in saving costs and ensure continuity and success of a business enterprise. In the given example, the business is tasting sweet success of soaring business growth and profits. To remain and grow in the market, one needs to be aware of the costs and returns. Inventory management is very important in this case.

Raw materials have to be in continuous supply and have to be managed well. However, storing huge inventories involves risks. While storing huge inventory involves huge investment of owned or borrowed funds, it has a running cost like interest on borrowing funds, or opportunity cost on own capital, obsolescence, warehouse rent, overheads like power, labor and safety and watch and ward to maintain in good condition.

Our advice would be to have a JIT (Just in Time) technique, where the unit ensures that materials would be supplied a day in advance and payment done on the same day. This way, cost is saved, materials are of latest quality and prices are competitive. Many companies follow this technique of inventory management. Unless the raw material is scarce or of high value and may be out of supply in future, one can adopt this system. This system is adopted by the Japanese in their inventory management very efficiently. TELCO in India, Finolex, Bajaj Auto in India, follow this technique very effectively.

Since the raw material used in outdoor benches are basically either wooden, steel or Cement structures, one need not be overly concerned about their availability. They can have a few well-known suppliers in their list of reliable suppliers, who are committed to supply and maintain prompt delivery schedules. Thus, this problem can be addressed effectively.

Hope this is helpful.

All the best.