In today’s logistics, efficient inventory management is more important than ever. An infinite number of references are managed, the origin and destination of products are increasingly globalized, and speed of delivery is one of the critical points in the customer experience, to mention just a few of the factors that make it necessary to have precise inventory control to ensure smooth operations.
Fortunately, today there are technological solutions that facilitate inventory management and logistics management in general in ways that were unthinkable just a few decades ago. However, these tools provide a very wide range of possibilities, and the key is to adapt them to each company and sector, since different types of inventory have their own specific characteristics and applications.
In previous articles we have already discussed the different types of inventory, so in this article we will explore three practical examples of the main inventory types and how they would be applied in three different fictitious companies.
1. Inventory of raw materials at Hilos Brillantes textile company
Hilos Brillantes is a textile company that specializes in the manufacture of high quality fabrics for luxury fashion. The company’s main raw material is silk yarns imported from international suppliers.
To ensure uninterrupted production and keep warehousing costs low, the company maintains a strategic inventory of silk yarns. They use a just-in-time or JIT inventory management system in which they place orders with their suppliers based on projected demand and delivery schedules. In addition, they establish strong relationships with trusted suppliers to minimize the risk of raw material shortages.
What are the main fields that your inventory management system would have?
- Product ID: A unique identifier for each type of silk thread.
- Description: Specific details about the product, such as thickness, color, and material type – this information would be recorded in separate subfields.
- Quantity in stock: The current quantity of each type of yarn available in inventory.
- Supplier: The name or identification of the supplier of each type of silk thread.
- Last Replenishment Date: The date on which the last inventory replenishment was made for each type of yarn.
- Unit Price: The unit cost of each type of silk thread.
What are the advantages of this system?
- Reduced warehousing costs by keeping inventory levels low.
- Greater flexibility to adapt to changes in market demand.
- Minimized risk of inventory obsolescence.
2. In-process inventory of the automotive company “TechWheels”
TechWheels is a manufacturer of automotive components specializing in high-end brake systems.
Since the company operates in a mass production environment with highly standardized processes, they implement an efficient in-process inventory system. They maintain a continuous flow of materials on the production line to avoid interruptions and delays. They use just-in-time and lean manufacturing techniques to minimize excess inventory and maximize operational efficiency.
What are the main fields that your inventory management system would have?
- Component ID: A unique identifier for each type of automotive component.
- Description: Specific details about the component, such as model, type and features, in separate subfields.
- In-Process Quantity: The quantity of each component that is currently in the manufacturing process.
- Production Stage: The current stage in the production line that each component is in.
- Estimated completion date: The expected completion date for the manufacture of each component.
- Quality Requirements: Quality specifications that components must meet during production.
What are the advantages of this system?
- Reduced costs related to warehousing and in-process inventory obsolescence.
- Improved operational efficiency by minimizing lead times and production bottlenecks.
- Increased responsiveness to changes in market demand.
3. Finished product inventory of the technology company InnovaTech
InnovaTech is a fictitious company that manufactures state-of-the-art electronic devices, such as smartphones and tablets.
Given the highly innovative and volatile nature of the technology market, InnovaTech adopts a finished product inventory strategy that balances product availability with minimizing associated costs. They maintain a minimal finished goods inventory in stock and use advanced demand forecasting and data analytics systems to anticipate market needs and adjust production accordingly.
What are the main fields that your inventory management system would have?
- Product ID: A unique identifier for each electronic product.
- Description: Specific details about the product, such as model, storage capacity and features, in separate subfields.
- Quantity in stock: The current quantity of each electronic product available in inventory.
- Production Date: The date each electronic product was produced.
- Product Status: Indication of whether the product is available for sale or is reserved for shipment.
- Selling Price: The suggested retail price for each electronic product.
What are the advantages of this system?
- Reduced warehousing costs by minimizing finished goods inventory.
- Maximizing product availability by anticipating and meeting market demand.
- Flexibility to adapt quickly to changes in consumer preferences and market conditions.
As we can see, some of the fields are transversal to different companies and types of activity, while others are more specific. It is essential that each company carefully defines the information it needs for efficient inventory control and management. This will help them improve operational efficiency, reduce costs and ensure customer satisfaction.
