Page 137 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes  Reordering is done by factoring in the demand and the lead time required to get the order
filled. Businesses must maintain a minimum inventory level as a buffer to prevent
shortages.
 Radio frequency identification tags, or RFIDs, can be used to track and protect valuable
inventory.

 JIT is a frequently used inventory ordering system that requires the use of an effective
inventory control system and a solid understanding of the demand of the products a
company sells.
 According to effectiveinventory.com, managers often underestimate the effect of theft on
their inventory costs. Security cameras and keycard-access points in the inventory storage
areas should be installed.
 A notification system should be created to alert employees when an inventory item’s
re-order point or maximum stock level has been reached.
 VED–vital, essential and desirable is used primarily for control of spare parts. The spare
parts can be divided in to three categories vital, essential, or desirable—keeping in view
the criticality to production.
 The SDE analysis is based upon the availability of items and is very useful in the context
of scarcity of supply. In this analysis, S refers to scarce items, D refers to difficult items
which are available indigenously but are difficult items to procure, E refers to items which
are easy to acquire and which are available in the local markets.
 FSN analysis is based on movement of items in the store house. The items are classified as
Fast moving (F) slow moving (S) and Non-moving (N).

 XYZ analysis is one of the basic supply chain techniques, often used to determine the
inventory valuation inside a store. It is also strategic as it intends to enable the Inventory
manager in exercising maximum control over the highest stocked item, in terms of stock
value.

 Logistics involves the coordination of the movement and storage of inputs and outputs in
order to satisfy customer demand in the right place at the right time at the lowest cost.

9.7 Keywords

ABC Analysis: The classification of items in an inventory according to importance defined in
terms of criteria such as sales volume and purchase volume is known as ABC analysis.
FSN Analysis: FNS analysis divides the items of stores into three categories in the descending
order of importance of their usage rate.

Inventory Control: Supervision of the supply and storage and accessibility of items in order to
insure an adequate supply without excessive oversupply is known as inventory control.
Inventory Receipt: The receipt of products at a fulfillment center is known as an inventory
receipt. Products are either expected and recorded in expected inventory records, or received
ad hoc.
JIT: Just-in-time (JIT) is an inventory strategy that strives to improve a business’s return on
investment by reducing in-process inventory and associated carrying costs.

Logistics Management: The coordination of various organizations and functions to source, procure,
and deliver goods to the client is known as logistics management.

132 LOVELY PROFESSIONAL UNIVERSITY