Inventory Management in SCM - EBC6230

8/13/2019 Inventory Management in SCM - EBC6230

1/18

E-Supply Chain Technologies & Applications

EBC 6230 Winter Session 2014

Title : Inventory Management in SCM

Submitted toDr. Mohamed Baymout

Prepared byAnil Momin 7037681

Alaa Alharbi - 6689773

Anil Momin 7040551


2/18

Agenda

1. Traditional SCM vs e-SCM

2. Inventory Management

3. Role of Inventory Management in SCM

4. Impact of e-SCM in Inventory Management5. Methods for effective inventory Management.

6. Tools used for managing inventory

7. Case Study - Domino Pizza

8. Problems

9. Possible Solution

10.Conclusion

11.References


3/18

Traditional SCM vs E- SCM

Supply chain management (SCM) is the process of coordinatingand optimizing the flow of all products or service, information and

finances among all players of the supply chain, from raw material

provider to the end consumer.

ESupply chain is a system which manage inventories based onelectronic Web technologies using internet.

Difference between SCM & e-SCM-The main difference between traditional and modern supply

chain management approaches is in how the activities in the

processes are interconnected.

http://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdf
http://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdfhttp://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdfhttp://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdfhttp://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdfhttp://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdf


4/18

Inventory Management

Inventory management is the processthat identify the amount and the position ofthe goods that a firm used in their product

http://www.barcodesinc.com/articles/what-is-inventory-management.htm


5/18

Role of Inventory Management System

in SCM The role of inventory in the supply chain is to bridge the differencebetween demand and supply.

Inventory management helps a business achieve several goals:

satisfy demand but ensuring commensurate product availability and

minimize costs by capitalizing on economies of scale

Inventory management help in creating a balance between

availability and efficiency

http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/
http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chain-management/


6/18


7/18

Methods to Manage Inventory foreffective SCM

Inventory Planning Appropriate Forecasting Supplier Assistance

Lead time should be appropriate Monitor inventory levels Inventory Management Systems (e.g ERP inventory

Modules like Procure to Pay and Order to Cash)

http://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.html
http://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.html


8/18

Economic Order Quantity Reorder Point

Safety Stock

Tools for Managing Inventory


9/18

Economic Order Quantity -EOQ

Developed by Ford.W Harrison in 1913. It identify the order size.

It minimize total ordering cost and holding cost. Underlying Assumptions:

o

Ordering Cost is Constant.o Rate of demand is known

o Lead time is fixed

o Only one product is involved.


10/18

Re-Order Point

It identifies a certain point when to order inventory. It help orgainsation to avoid running out of stock.

Reorder point can be identify by two methodo Continuous Review System

o Periodic Review System


11/18

Safety Stock

Additional Inventory to meet average demand during lead time.

It protects companies from any uncertainty in demand and leadtime.

Balance the cost of stockout against the holding cost of extrainventory.


12/18

CASE STUDY


13/18

Case Study - Dominos Pizza

Dominos Pizza started its operation in 1960.

In Sep, 2012 they achieve 10,000 outlets in the world.

In 1999 Company sold 360 Million Pizza in USA market andreached $3.36 Billion in sales.

They have 18 distribution centers which cover 4,500 outlets.

http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002
http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002


14/18

Issues in maintaining stock.

Issues of vendor Ordering.

Orders requirement of Outlets.

Not following a safety stock procedure.

Expire product inventory Issues.

Problems


15/18

Possible Solutions

Implement a e-SCM system.

Formulate Inventory System.

Formulate Ordering System.

Generate safety stock.

Forecast requirement of inventory.

Integrate store inventory system with sales.


16/18

Conclusion

Effective E-SCM techniques can play vital role in

managing the business efficiently and it also provideopportunity to create better business relations with

outside suppliers and departments within the

organisation.


17/18

References:

EOQ: http://en.wikipedia.org/wiki/Economic_order_quantity

Methods to manage:

http://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.html

Reorder Pointhttp://docs.oracle.com/cd/A60725_05/html/comnls/us/inv/roplan.htm

http://en.wikipedia.org/wiki/Reorder_point

Saftey Stock:

http://accountingexplained.com/managerial/inventory-management/safety-stock

http://www.businessdictionary.com/definition/safety-stock.html

Case Study:

http://www.retailsolutionsonline.com/doc/supply-chain-management-

helps-dominos-deliver-0002
http://en.wikipedia.org/wiki/Economic_order_quantityhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://docs.oracle.com/cd/A60725_05/html/comnls/us/inv/roplan.htmhttp://en.wikipedia.org/wiki/Reorder_pointhttp://accountingexplained.com/managerial/inventory-management/safety-stockhttp://accountingexplained.com/managerial/inventory-management/safety-stockhttp://www.businessdictionary.com/definition/safety-stock.htmlhttp://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002http://www.businessdictionary.com/definition/safety-stock.htmlhttp://accountingexplained.com/managerial/inventory-management/safety-stockhttp://accountingexplained.com/managerial/inventory-management/safety-stockhttp://en.wikipedia.org/wiki/Reorder_pointhttp://docs.oracle.com/cd/A60725_05/html/comnls/us/inv/roplan.htmhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.htmlhttp://en.wikipedia.org/wiki/Economic_order_quantity


18/18

Thank You !

Documents

Inventory Management in SCM - EBC6230