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(2^nd 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/