Question

“An effective inventory management system starts with analysis and design. The more thorough the analysis and the more care you take in developing the design, the fewer problems you’ll have running and managing a new inventory system.” Describe the essential elements of an effective inventory management system. Do you think justin-time inventory can be a useful inventory management strategy? Support your answer with some real-life examples.

Answer 1

The essential elements of an effective inventory system are as follows-

1. Clear description of the product- It is very important to have clear and informative description of your products. It should clearly depict the name , size , colour and other specifications of a product do it can be ordered properly through supply chain

2. Managing out of stock products- It is very essential to keep a track of products which are low in quantity so they could be adequately ordered.

3. Daily count- Daily count is an integral part of an inventory management and it is very important to keep daily track of your inventory status.

4. Inventory forecast analysis - It helps the understanding the demand level from different prospective consumers.

5.Optimized purchase orders -Optimization of purchase orders using artificial intelligence technology helps in effective inventory management.

Just in time inventory system is a Management strategy which advocates that excess inventory shouldn't be held and it should be ordered as an when required maintaining a prescribed level.It focuses on minimising inventory and maximizing efficiency so it can be an effective management strategy . The success of just in time inventory management system is based upon steady production, no machine breakdown and reliable suppliers. It helps the company to get away with the problem of holding excess inventory so it can be an useful inventory management strategy.

In real life, Just in time inventory management is hard to implement as there can be several orders which cannot be anticipated in advance and it will have to be given up. This could lead in losing up profits.  

Only a few companies which have robust supply chain like Toyota and Dell and Harley Davidson have adopted Just in time approach.