Implications of inventory positions (Inventory -control systems (The quick…
Implications of inventory positions
Long-term relationships with suppliers
Attributes of strategic-supplier alliances are trust and cooperation, interdependence, joint quality-improvement efforts
An organisation will have a great deal of involvement with suppliers of strategic scarce materials or highly complicated unique services
The nature of relationships that organisations have with their suppliers varies.
Normal performance: contribute to the development of suppliers by identifying their weaknesses and encouraging them to perform better.
Materials or service not available:it can enter into a contract with a chosen supplier of another material or service to manufacture this material or provide a service
Suppliers may be developed for black economic empowerment purposes or to improve their performance as a result of performance appraisals or if materials or services do not exist in the (local) market
Black economic empowerment (BEE) through purchasing:implemented as a way of setting right inequalities
Inventory -control systems
The quick-response (QR) and automatic-replenishment (AR) systems: defined as a vertical strategy in the supply chain in which the manufacturer strives to provide the product and services to its retail customers in exact quantities on a continuous basis with minimal lead times, resulting in minimum inventory levels throughout the retail apparel supply chain
Just-in-time (JIT) system: a system that eliminates the holding of inventory
The materials-requirements planning (MRP) system: is a computer-assisted system where the aim is to maintain minimum inventory levels.
The cyclical-ordering system: each item in the inventory is checked at fixed intervals & is supplemented by an order to bring the inventory to its maximum level again.
The system of fixed order quantities: based on the principle that each time new inventory is required, a fixed quantity (the EOQ) is ordered
Most of the inventory-control systems are based on the principles of one of the systems below:
The quantities that are ordered each time should keep inventory at the optimal level
Inventory should be managed and controlled so that the optimal levels can be maintained
The lowest cost is achieved where the two curves intersect
The number of units opposite the lowest total inventory cost on the graph is the most economic order quantity (EOQ)
Ordering costs increase and carrying costs decrease as order quantities decrease
Optimal inventory quantity is the inventory quantity that results in the lowest total cost of inventory
Ordering costs decline and carrying costs increase as order quantities increase
Inventory-carrying costs are those costs that are involved in keeping inventory.
Total inventory costs-consist of the sum total of inventory-carrying costs and inventory-ordering costs
Inventory-ordering costs are the costs of placing an order