A programs to reduce costs and improve performance. For

A
company which is involved in supply chain operations should perform the
processes of sourcing of raw materials and components, producing and
dispatching the finished products to customers. The main concern of each company
is to minimize the operational cost and to maximize profit. Although being a
part of the supply chain, a firm still focuses on optimizing its own costs or
profits, because the decisions concerning production and replenishment are made
separately and independently by the members of that chain. However, a supply
chain implies the interaction of its members, even when they have different
operational goals. Supply Chain Management incorporates a wide range of
activities: transportation & logistics, inventory & forecasting,
supplier management, after sales support and reverse logistics are some
examples. Inventory management is just one aspect of SCM.

 

Inventories
represent the largest single investment in assets form many manufacturers,
wholesalers and retailers. Inventory investment represents over 20% of the
total assets of manufacturers and more than 50% of the total assets of
wholesalers and retailers For many organizations, there is no doubt that
inventory management enhances their operations. There has been a question for
management about the efficiency of inventory management procedures in place
resulting from inconsistencies of inventory levels leading to various weakness
like losses that come as a result of over, under-stocking, expiry inventory,
failure to meet targets and low morale of the company members. As a result the
company?s stores are over crowded making the work of a store-keeper difficult,
late issue of materials to the department and these in turn result into poor
inventory service delivery (Wood, 2004).

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Pressures
of optimizing the efficiency of inventory is the impetus to pursue programs and
initiatives that reduce inventory costs. There are many examples of firms
utilizing different types of inventory management programs to reduce costs and
improve performance. For example, Dell Corporation operates a Just-in-Time
(JIT) system to 

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