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Inventory Control Importance in an Enterprise

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1.Discuss the importance of inventory control with respect to supply and demand.

2.What benefit can tools such as ABC analysis and just-in-time controls provide for an organization?

3.How can an enterprise resource planning system assist a firm with improving its business operations?

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Inventory control importance in an enterprise is examined.

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Inventory control: ABC Analysis and JIT

Render et al. (2003) define inventory as any stored resource that is used to satisfy a current or future demand. As such, it is a very important asset of an organization. Examples of inventory are raw materials, goods-in-process, and finished goods.
Although the role of inventory is important, it would also mean cost because of its underlying carrying and ordering costs as well as the so-called opportunity cost. If not effectively controlled, the company may incur unnecessary costs. It would also have implications on the company's ability to meet consumers' demand for its goods and services.

Importance of inventory control with respect to supply and demand
Inventory control contributes in providing the company a great deal of flexibility in its operations (Render et al., 2003). In relation to supply and demand, uses of inventory control are discussed as follows:
1. Maintaining adequate level of inventory of raw materials and goods-in-process would result to meeting production needs and would reduce occurrence of production delays as well as production or supply shortages. With enough production or supply of goods, the company would have a better capacity ...

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  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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