Management of inventory levels is essential for any organization that values customer-focused service delivery. Organizations may manage their inventory levels using demand forecasting, lead time production, and technology. The strategies used have accrued several organizational benefits.
Demand forecasting is the prediction of product demands in the future. When companies can accurately predict the number of products they clients will consume, they stock just-enough products to enhance customer satisfaction (Abolghashemi, Tarr, & Gerlach, 2020). Additionally, firms can plan for the expenses that will result from purchasing products. Organizations can anticipate expansion if they predict that their sales will be huge in the future. Finally, businesses can prevent stocking excessive obsolete goods. Therefore, demand forecasting enables organizations to have smooth inventory management.
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Firms may also manage inventory by reducing lead times. For instance, production processes could be reduced by concentrating machinery to minimize the average time spent transferring intermediate materials from a machine to another manually (Ghaderi, Dullaert, &Amastel, 2016). Additionally, conveyor belts may be used to link machines instead of allowing products to pile up then manually carrying them to the next machine to complete the output process. Finally, firms should have minimal production runs and machine set up times. The production lead time will decrease, and clients will have their products in ample time.
Finally, inventory management success may be enhanced through technology. Companies may use computers to track the real-time increase and decrease in their products. Consequently, they will perform demand forecasting more effectively and efficiently. Moreover, organizations that use technology to manage their inventory have scalability advantages because they can expand. Thus, technology is an efficient method of managing inventory.
Inventory management strategies are essential because they help the firm to cut costs while saving time. Additionally, organizations acquire enhanced scalability, besides enhancing their customer service. Thus, businesses should manage their inventories using recommended strategies, such as demand forecasting, lead time reduction, and technology.
References
Abolghasemi, M., Beh, E., Tarr, G., & Gerlach, R. (2020). Demand forecasting in supply chain: The impact of demand volatility in the presence of promotion. Computers & Industrial Engineering , 142 , 106380. doi:10.1016/j.cie.2020.106380
Ghaderi, H., Dullaert, W., & Amstel, W. P. (2016). Reducing lead-times and lead-time variance in cooperative distribution networks. International Journal of Shipping and Transport Logistics , 8 (1), 51. doi:10.1504/ijstl.2016.073316
