4 Inventory Software

4 Inventory Software

Henry Ford, developed a "scientific" system for inventory management in the early 1900's. Just-in-time buying (JIT), as it's called, relieves the financial drain of back orders, inventory carrying costs and slow movers on shelves or in the warehouse. It thwarts overbuying. Moreover, since empty-looking shelves are a signal to buy, it helps avoid the tedious job of minutely tracking how every item carried is selling.

Lowering inventories is an easy way to decrease working money needs. Performance measurements, like the old standby ROA (return on assets) and the er EVA (economic value added), as well as other measures that gauge how efficiently capital is used, have become more common organizational drivers. In fact, many an executive's bonus depends, at least in part, on how efficiently capital is used. Couple the drive for efficient capital use with the need to respond more quickly to changes in customer demand, with short order-to-delivery cycle times, and the problem that is challenging many manufacturers is well defined.

In many organizations, unusable or damaged inventory is hidden. Maybe it is thrown in a scrap pile or discarded. This could be damaged material, unneeded scrap created when a mistake was made in filling an order or multiple quantities of a product that are too small to be sold or used. Material may be damaged because it isn't being stored properly or perhaps the vendor should be approached regarding better packaging. There may be some employees who are not careful in the way they handle materials. This information could point out that the needed tools are not available-such as it is difficult to measure a long length of pipe with a short ruler, just as it is difficult to create a precise, clean cut with a saw that is not sharp. The problem of too small, left over quantities may need to be addressed to perhaps a customer; who might be forced to purchase an entire unit.

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