Inventory Management Concepts

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Contents

Glossary

Inventory

Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business.

Inventory Management Application

Inventory management applications has become a valuable tool for organizations looking to more efficiently manage stock. While the capabilities of applications vary, most inventory management applications give organizations a structured method of accounting for all incoming and outgoing inventory within their facilities. Organizations save a significant amount in costs associated with manual inventory counts, administrative errors and reductions in inventory stock-outs.

SKU

Stock Keeping Unit (SKU) is a unique combination of all the components that are assembled into the purchasable item. Therefore any change in the packaging or product is a new SKU. This level of detailed specification assists in managing inventory. See http://en.wikipedia.org/wiki/Stock_Keeping_Unit

Part number

A part number is a unique identifier of a part used in a particular industry. Its purpose is to simplify referencing to that part. A part number unambiguously defines a part within a single manufacturer. See http://en.wikipedia.org/wiki/Part_number

Build to stock

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

Build to order

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

Typology

  • Buffer/safety stock
  • Cycle stock (Used in batch processes, it is the available inventory excluding buffer stock)
  • De-coupling (Buffer stock that is held by both the supplier and the user)
  • Anticipation stock (building up extra stock for periods of increased demand - e.g. ice cream for summer)
  • Pipeline stock (goods still in transit or in the process of distribution - have left the factory but not arrived at the customer yet)

Types of goods

  • Raw materials - materials and components scheduled for use in making a product.
  • Work in process, WIP - materials and components that have begun their transformation to finished goods.
  • Finished goods - goods ready for sale to customers.
  • Goods for resale - returned goods that are salable.

VMI

VMI - Vendor-managed inventory. See also http://en.wikipedia.org/wiki/Vendor-managed_inventory.

Related wiki articles

Related books

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