Materials and Inventory Management Structure

Materials and inventory management is the cornerstone of effective supply chain management. When the proper inventory management methods and material management system are in place, enterprises can enjoy the benefits of strategic cost management.

People, process, and automation infrastructure all play key roles in proper materials and inventory management. Without all of the three legs, you have an unstable foundation for your business.

People

You must ensure that all team members in materials and inventory management are properly trained. They should have access to documentation about their area of responsibility and those processes should be well-written and easy to understand. These people need to be willing to follow rules and communicate proactively.

This is true from buyers all the way down to receivers in your warehouse. From internal transportation coordinators to outside strategic sourcing analysts, building a strong team is critical to the success of materials and inventory management processes.

Processes

All processes should be documented to the point if a key person left your organization tomorrow.

Periodically or during any changes to processes, these must be reviewed for adherence to strategic sourcing methodology, be they related to purchasing, in-transit visibility, receiving, warehousing, asset tracking, outbound procedures, or any other supply chain function.

Wherever possible, information flow and materials processing should be automated.

For example, by requiring the use of Advanced Shipping Notice data in receiving as part of the receiving process, and initiating exception handling procedures when there is a miss-match, warehousing accuracy improves, lessening the chances of a critical out-of-stock.

Automation Infrastructure

With greater and greater demand for efficiency, integration and automation of the infrastructure surrounding materials and inventory management is critical to strategic cost management in enterprises of any size.

From the sole proprietor to multi-national corporations, the ability to leverage such tools as e procurement systems, mixed vendor strategy leveraging both low cost country sourcing and domestic sourcing, and appropriate integration between accounting tools and those tools used for materials management are non-negotiable.

Taking the first step

Making materials and inventory management a priority starts with an honest evaluation of the current state of your business. Some implementations are simple and inexpensive. Other materials management systems require a significant commitment to hardware and software upgrades.

 

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