Inventory Management
Inventory Management
Inventory Management
Inventory
management is the process of managing the inflow and outflow of a company’s
inventories. The purpose of inventory management is to ensure the inventories are
properly controlled to prevent spoilage, theft over and under stock. Also,
based on Wild (2002), “The purpose of the inventory control function in
supporting the business activities is to optimize the three targets:
·
Customer
Service
·
Inventory
Costs
·
Operating
Costs"
These purposes
should be considered in order to efficiently and effectively manage the
inventories, as well as to satisfy customer needs.These purposes can be met if
a company has a good inventory management system.
Inventory Management System
Inventory
management system is a process that enables a company to easily manage the
inventories in a single or multiple locations. Before the Industrial Revolution,
the inflow and outflow of a company’s inventories were manually counted and
recorded. Because the inventories were manually counted and recorded, there
were inconsistencies on number of inventories. However, since 1930s until
today, the innovations of inventory management system is continuous.
The use of bar
code is one of the systems in order to manage the inventory of a company,
especially merchandising stores. The purpose of bar coding system is to easily
identify the inflow and outflow of inventories in the store. This system helps the
processes of a company to identify the current number of stock of the inventories
of a company, as well as to double check the revenue by determining the outflow
of the stock.
1930s
During the 1930s,
a team at Harvard University designed the first modern check-out system. This
check-out system enables to end the inconsistencies in recording the
inventories. The process of this system was to use punch card that matched with
catalog items. Once the punch card is read by the computer, the matched item in
the catalog will be delivered from the storeroom to the customer in the payment
station. At the payment, billing of the item will be processed as well as the
inventory management.
1940s -1950s
During the 1940s
to the 1950s, Bernard Silver and Normal Woodland, students at Drexel Institute
of Technology collaborated to design and invent a bar code that will easily
manage the inflow and outflow of the inventory. The bar code is now known as
the “bulls-eye” bar code. Figure 1, is an example of the bar code designed by
Silver and Woodland, each item in the store had a unique pattern of barcode
that is scanned to the system to easily manage the inventory of a company.
Figure 1
"Bulls-Eye" Bar Code
1970s
During the 1970s,
many technological devices have been invented, which make the inventory
management easier for a company. On year 1972, the first modern scanning system
was invented by David Collins and was first installed by RCA.
During the 1970s,
George Laurer designed the standardized 12 digit Universal Product Code (UPC) that
which were assigned to the items in the stores. Unlike to the “bulls-eye” bar
code, the Universal Product Code would remain in use and same codes were
assigned in multiple products, as long as it is the same item. Until now,
Universal Code are widely used, Figure 2 is an example of a UPC.
Figure 2
UPC
1990s
During the
1990s, the 2D bar code that is developed by a company in Japan named Denso-Wave.
This bar code can store for a maximum of 7,089 characters. Figure 3 is an
example of 2D bar code.
Figure 3
"2D" Bar Code
2000s
During the
2000s, the barcode systems are still being used. But more inventory management
software has ascend, such as inFlow, Inventoria, iMagic Inventory, Inventory
power and more to help small companies to manage and control their inventory.
Even though
following technologies for managing inventory has ascend, a company should sill
have the following procedures (Wild, 2002) to efficiently manage the inventory:
· Enter
issue on system. (Delay one hour?)
·
Print
out list of items which need ordering. (Next morning?)
·
Confirm
that items do need ordering. (Rest of the day?)
·
Print
purchase orders. (Next day?)
·
Get authorization
for purchase. (When director is next available!)
Inventory
management is an important procedure to a company because it helps to secure
the inventories, to determine the current standing of the business and
irregularities in a company. With the
help of technological innovations, such as, barcode system and inventory
management software, the managing and controlling the inventory of a company becomes
easier compared during the year 1920s, where inflows and outflows of
inventories are manually counted and recorded. Therefore, a company should take
advantage of this system by using it ethically to avoid any discrepancies in
the inventories.
Question: Based
on Wild, what are the three purposes of inventory management?
References
Wild, T. (2002). Best
Practice in Inventory Management(2nd Edition).Boston, MA:
Butterworth Heinemann
Crosby, T. (2011). How
management inventory systemworks. Retrieved, February 16, 2012, from: http://money.howstuffworks.com/how-inventory-management-systems-work1.htm
Geek, I. (2009). Invention
of the Bar Code Patented: Saving You Time at Checkout. Retrieved, February
16, 2012, from: http://www.patentplaques.com/blog/?p=178
Haberstroh, M. (2011). History of the Bar Code.Retrieved,
February 16, 2012, from: http://barcode.com/20110610585/history-of-the-bar-code.html
Topten Reviews (2012). Inventory
Software Review. Retrieved, February 18, 2012, from: http://inventory-software-review.toptenreviews.com/
Figure 1. Retrieved, February 18, 2012, from: http://www.patentplaques.com/blog/?p=178
Figure 2. Retrieved, February 18, 2012, from: http://www.codeupc.net/barcode.jpg
Figure 3. Retrieved, February 18, 2012, from: http://2d-code.co.uk/qr-code-google-charts-api/
