recent trends in inventory control

RECENT TRENDS

IN

INVENTORY CONTROL

INVENTORY CONTROL

Inventory is the raw materials, work-in-process

products and finished goods that are considered to be

the portion of a business's assets that are ready or will

be ready for sale.

Inventory control is the processes employed to

maximize a company's use of inventory.

RECENT TRENDS.

JIT System

MRP I

MRP II

ERP

JIT SYSTEM ( JUST IN TIME).

Companies employ to increase efficiency and decreasewaste by receiving goods only as they are needed inthe production process, thereby reducing inventorycost.

This method requires producers to forecast demandaccurately.

The company started this method in the 1970s, and

it took more than 15 years to perfect.

MRP I (MATERIAL REQUIREMENTS PLANNING)

Material requirements planning (MRP) and

manufacturing resource planning (MRPII) are

predecessors of enterprise resource planning (ERP), a

business information integration system.

MRP is concerned primarily with manufacturing

materials

ADVANTAGES & DISADVANTAGES

DISADVANTAGES

MRP only give accurate o/p if accurate i/p is provided toit.

MRP is costly, time consuming & difficult to implement.

ADVANTAGES

Helps to minimize inventory level.

Track material requirement.

Identifies shortage in inventory items.

On time delivery.

MRP II (MANUFACTURING RESOURCE PLANNING)

MRPII stands for manufacturing resource planning and

builds on MRP by adding shop floor production

planning and tracking tools.

MRPII is concerned with the coordination of the entire

manufacturing production, including materials, finance,

and human relations.

ADVANTAGES & DISADVANTAGES

ADVANTAGES

Better control of inventories.

Better quality and also control quality.

Improve design control.

Accurate inventory control.

Reduced working capital for inventories.

DISADVANATGES

Staff must be fully trained for achieving benefit fromMRP II.

Once implemented MRPII it will require accurateinformation.

ERP

ERP (ENTERPRISE RESOURCE PLANNING)

A third-generation system called ERP, or enterprise

resource planning, which integrates all departments of the

business, not just manufacturing and purchasing.

ERP Systems make it easier to track the workflow across

various departments.

ADVANTAGES & DISADVANTAGES

Advantages:

Optimization of business processes.

Accurate and timely access to reliable information.

Elimination of unnecessary operations and data.

Reduction of time and costs of litigation

Disadvantages:

The installation of the ERP system is costly.

ERP consultants are very expensive take

approximately 60% of the budget.

The systems can be difficult to use.