What can we do today to make the best supply chain operations of the future?

What can we do today to make the best supply chain operations of the future?

(Daman) One of the biggest things that we would have to control in order to build supply chains of the future is controlling inventory costs. These costs can really make or break a supply chain of any firm. Inventory cost refers to the total cost a business experiences while holding and maintaining its inventory over a length of time. This can include the cost of equipment, labor, and security features, along with other costs. A business can manipulate its inventory cost however it sees fit and maintaining a low inventory cost while creating the best conditions for the inventory is an essential business task. Axsater breaks down inventory costs into three subcategories; holding costs, setup costs and shortage costs (Axsater, 2015). Inventory costs play a large role in ensuring that that a firm’s supply chain operations are ran smoothly and most of all cost efficiently. It is the job of any good logistician to ensure that a business meets all of their customer demands but also does so in a cost effective way.

References:

Axsater, S. (2015). Inventory Control (Third ed.). Switzerland: Springer International Publication.

Jason, In today’s supply chain management there are many factors that make it successful. For the inventory portion it is important to give consideration to not only serviceable but unserviceable assets. Unserviceable or repairable items are part of a company’s inventory but are not treated the same. Repairable assets are pieces or items which can replace items that fail (Axsater, 2015). If the smaller pieces are used to repair larger items after they are repaired and put back into the company’s inventory it will reduce the costs or building or creating new assets. Since repairable assets are stocked in the warehouse to fix other larger or higher valued assets it will increase the stock level and intern increase the inventory costs for the company. So the costs that will be assessed for inventory are holding costs. The holding costs are the opportunity costs for capital tied up in inventory (Axsater, 2015).

If the company is able to decrease the holding costs by moving the property off the shelves it will benefit them. One way this can happen for repairable assets is offering sales for the pieces to customers. If the items can be sold for any profit this will decrease the holding costs. If they are able to decrease inventory costs and use the money to focus on other areas in the supply chain to benefit the company it will bring greater success for the future.

Reference

Axsater, S. (2015). Inventory Control. Lund: Springer International Publishing.

 

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