INVENTORY
MANAGEMENT
PRESENTED BY:
DIVINA, QUEEN ASHALEN O.
BENTILLO, GILLIANN ABIGAIL
WHAT IS INVENTORY?
Inventory is one of the most expensive assets of
many companies, representing as much as 50% of
total invested capital. Operations managers have
long recognized that good inventory management
is crucial. A firm can reduce costs by reducing
inventory. On the other hand, production may stop
and customers become dissatisfied when an item
is out of stock. The objective of inventory
management is to strike a balance between
inventory investment and customer service. You
can never achieve a low-cost strategy without
good inventory management.
FUNCTIONS OF INVENTORY:
Inventory can serve several functions that add flexibility to a
firm's operations. The four functions of inventory are:
To provide a selection of goods for anticipated customer
demand and to separate the firm from fluctuations in that
1
demand. Such inventories are typical in retail
establishments.
To break various parts of the production process. For
example, if a firm's supplies fluctuate, extra inventory may
2
be necessary to break the production process from
suppliers.
To take advantage of quantity discounts, because
3 purchases in larger quantities may reduce the cost of
goods or their delivery.
4 To protect against inflation and upward price changes.
INVENTORY
Inventory management balances costs
and service with methods like EOQ
(optimal order size), JIT (lean, timely
delivery), and Safety Stock (buffer
against shortages). Philippine SMEs face
manual tracking, data errors, and poor
visibility, while POS systems automate
tracking, reducing these issues by
providing real-time data, improving
accuracy, and streamlining operations,
crucial for growth.
STOCK CONTROL METHOD
EOQ (Optimal Order Size) Just-in-Time (JIT) Safety Stock
A formula to find the Extra inventory held to
Receiving goods only
ideal quantity to order to prevent stockouts due to
as they are needed for
minimize total inventory unexpected demand
production or sale,
costs (holding + spikes or supply delays,
reducing holding costs
ordering), ensuring you balancing customer
and waste by keeping
buy enough without service with holding
overstocking. inventory minimal. costs.
INVENTORY CHALLENGES IN THE
PHILIPPINES (SMES/COOPERATIVES)
Manual Processes: Reliance on paper, spreadsheets leading to
1
errors.
2 Inaccurate Tracking: Discrepancies between physical stock and
records.
3 Poor Visibility: Lack of real-time understanding of stock levels.
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4 Over/Understocking: Balancing costs with customer demand.
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5 Data Management: Difficulty managing expanding product lines.
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POINT-OF-SCALE (POS) SYSTEMS &
INVENTORY TRACKING
Automation: Automatically updates stock levels with every sale,
1
eliminating manual entry.
2
Real-Time Data: Provides instant visibility into what's in stock, where,
and when to reorder.
3 Improved Accuracy: Reduces human error in counting and recording.
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4 Sales Insights: Helps identify trends, manage bestsellers, and optimize
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ordering.
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Integration: Connects sales, inventory, and potentially accounting,
streamlining operations.
HOW POS HELPS SMES IN THE PH
1
Solves Manual Issues: Replaces manual tracking with digital,
automated systems.
Reduces Overstock/Stockouts: Better data helps apply methods
2
like EOQ and safety stock effectively.
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3
Increases Efficiency: Frees up time from counting to focus on
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THANK YOU