26/05/2024

The CTO

The Best Chief Technology Officer

Inventory Management: Key to a Successful Manufacturing Business

Inventory Management: Key to a Successful Manufacturing Business

Inventory management is fundamental in any manufacturing outfit. This is one part of manufacturing business that must be well handled and controlled. This aspect has records of high level of mismanagement thus resulting to total collapse of many of these companies. Some of these manufacturing companies are very big but with highly expensive raw materials/components that go into production. Where these raw materials have to go into production by a way of measurement, it is important that the right quantity/dosage is issued out to avoid loss of money, especially where the quality control measures are not too strong.

It is therefore important to put in place strong inventory control so as to forestall damages and loss of capital resulting to return products, product spoilage, increased haulage/transport cost resulting from double handling and capital erosion.

The hallmark of a good and sound inventory control system is the protection of capital. The first thing necessary in any business is not the targeting of profit at all cost but the protection of the capital. Proper inventory management will allow for right utilization of the company’s capital and right investment of same. Since huge investment goes to stocking of production materials, it is also important that proper measurement be put in place to safeguard the company’s asset of stock by a way of putting the right person in charge of the management of the stocks and ensuring period audit of the stocks.

There is nothing as bad as stock out in any manufacturing outfit. One item of stock not available could jeopardize the entire production process. Thus, inventory has to be well controlled to allow for an uninterrupted production process. This will further help the company in meeting with its obligations to the customers by meeting their demands at all times.

One area that is equally very crucial in inventory management is in the management of the available resources – men and machine. It is in the interest of the company that idleness is prevented in the company. The time is paid for and the personnel are meant to work for their daily pay. Proper control of inventory will help to eliminate idleness within the production system.

In some cases, the production manager may take unilateral decision to go ahead with production without one of the required raw materials in order to meet the production plan for the way, especially in a small, unstructured set up. This will lead to packing products that are below the required quality. This will also lead to the erosion of the customers trust and confidence in the products. If the products are returned and could not be reworked, it will result in wastage.

Ultimately, an effective inventory control system is key to the survival and growth of any manufacturing outfit and must be handled to forestall unimaginable consequences on the company as a whole.