IP-5 Assignment To Pro.Lucy

Executive Summary

The purpose of this assignment is to discuss the standard operating procedures that are necessary for proper inventory control. In order to achieve proper inventory in the company, it is important to have the right operation procedures. The assignment will hence discuss these procedures in line with the inventory management for the company. There will be a detailed analysis of each procedure that will give an insight of effective control of inventory to ensure that there are no losses on company’s inventory. In the assignment, there will a detailed analysis of the following procedures as they apply to inventory control in the company; cycle counts, ABC items, damages, overages and shortages. These procedures shall remain the focus of the assignment as they help in achieving the success of effective inventory control. In this case, the inventory is an important factor of production in the company.

Cycle count is a very important procedure that can help to achieve the success of the company in terms of inventory control. It refers to the time interval of placing a new order of inventory. The company should place a new order within reasonable intervals. The time interval should be well set to ensure that there are no delays in production of goods. If there is a poor timing during placing an order, there are chances that there will be a delay in the production of goods in the company (Parkin, 2014). The delay is likely to occur since the suppliers take time in preparing the order. The delivery might be made late when the entire inventory is over hence creating delay in production. The company might end up losing some sales as some customers will seek for alternative places to buy the missing products. In this scenario, the company should ensure that there is a proper cycle count to avoid any problem that might lead to delays in production.

The other standard operating procedure is ABC items. In this procedure, a company should always make a list of inventory and prioritize each item based on its importance to the production of goods. The company should hence order for the inventory of high priority first. Then, the other inventory items should be ordered later on. This is important as it will ensure that the most important inventory items are received first (Parkin, 2014). The production of goods can hence continue once the important inventory items are received. The other units can be received later and hence there is no effect on production. It is important for the production manager to have the list first and ensure that there are no delays in production. It is important as there will be adequate inventory all the time hence success in production of goods.

The third standard operating procedure that is necessary for effective inventory control in the company is damages. It refers to the inventory that is destroyed within the warehouse. In order to achieve efficient inventory control, the procedures to maintain the damages on inventory are necessary. The company should have a good way of handling inventory while in the store to avoid or minimize the damages. Reducing these damages might require training of the employees who work in the stores. The training can help these employees to achieve a better way of handling the inventory and hence achieve success in the future. The company should also have specific ways of handling the damaged units of inventory to avoid spread of damages to the inventory in the right state (Cornes, 2011). With this in place, there will be effective inventory control in the company hence easy to achieve the desired production levels.

The other important operational procedure that can lead to effective inventory control is overages. It refers to the inventory that has been in the store for too long than the expected time. If the inventory takes a longer period in the store than expected, then it will obviously become obsolete (Neumann, 2012). It means that the inventory will not be of any use to the production of goods. To avoid this, the company should only order for inventory that is adequate enough to produce the required level of output. The overage inventory should be disposed or even returned to supplier. It will hence lead to better inventory control in the company.

The final operating procedure is shortages. It refers to a situation where the required inventory items are not adequate to meet the production needs of the company. The company hence cannot produce the desired output units (Neumann, 2012). To avoid such losses, the production department should be keen when placing an order. The order should contain the necessary units of inventory to ensure that no shortage arises in the future hence smooth production of goods.

Conclusion

Concluding on the assignment, the five standard operating procedures are important at ensuring effective inventory control in the company. Cycle counts, ABC items, damages, overages and shortages are the important procedures that the company should adopt in ensuring there is effective inventory control hence avoiding possible losses.

References

References

Cornes, R., & Sandler, T. (2011). Inventory management. Cambridge [Cambridgeshire]: Cambridge University Press.

Parkin, M. (2014). Inventory Control and management. Reading, Mass.: Addison-Wesley Pub. Co.

Neumann, J., & Morgenstern, O. (2012). Inventory Control: Princeton University Press.