EBC6230 inventory management

1. E-Supply Chain Technologies & Applications
EBC 6230 – Winter Session 2014
Title : Inventory Management in SCM
Submitted to:
Dr. Mohamed Baymout
Prepared by:
Anil Momin – 7037681
Alaa Alharbi - 6689773
Anil Momin – 7040551

2. Agenda
1. Traditional SCM vs e-SCM
2. Inventory Management
3. Role of Inventory Management in SCM
4. Impact of e-SCM in Inventory Management
5. Methods for effective inventory Management.
6. Tools used for managing inventory
7. Case Study - Domino Pizza
8. Problems
9. Possible Solution
10.Conclusion
11.References

3. Traditional SCM vs E- SCM
•
Supply chain management (SCM) is the process of coordinating
and optimizing the flow of all products or service, information and
finances among all players of the supply chain, from raw material
provider to the end consumer.
•
E–Supply chain is a system which manage inventories based on
electronic Web technologies using internet.
•
Difference between SCM & e-SCMThe main difference between traditional and modern supply
chain management approaches is in how the activities in the
processes are interconnected.
http://www.jgbm.org/page/12%20Fu-Hung%20Chiu.pdf

4. Inventory Management
“Inventory management is the process
that identify the amount and the position of
the goods that a firm used in their product”
http://www.barcodesinc.com/articles/what-is-inventory-management.htm

5. Role of Inventory Management System
• SCM
in The role of inventory in the supply chain is to bridge the difference
between demand and supply.
•
Inventory management helps a business achieve several goals:
satisfy demand but ensuring commensurate product availability and
minimize costs by capitalizing on economies of scale
•
Inventory management help in creating a balance between
availability and efficiency
http://clarisseporto.wordpress.com/2012/02/15/the-relationship-between-inventory-management-and-supply-chainmanagement/

6. Impact of E-SCM on Inventory Management
●
JIT bring more efficiency and better customer satisfaction in the
organisation.
●
Just in Time inventory Management:
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Components arrives as they are needed.
Shorten Lead Times
Integrate all supplier with SCM System
Reduce holding cost
Reduce wastage.

7. Methods to Manage Inventory for
effective SCM
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•
•
•
•
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Inventory Planning
Appropriate Forecasting
Supplier Assistance
Lead time should be appropriate
Monitor inventory levels
Inventory Management Systems (e.g ERP inventory
Modules like Procure to Pay and Order to Cash)
http://smallbusiness.chron.com/top-ten-ways-manage-inventory-11099.html

8. Tools for Managing Inventory
•
•
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Economic Order Quantity
Reorder Point
Safety Stock

9. Economic Order Quantity -EOQ
•
•
•
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Developed by Ford.W Harrison in 1913.
It identify the order size.
It minimize total ordering cost and holding cost.
Underlying Assumptions:
o
o
o
o
Ordering Cost is Constant.
Rate of demand is known
Lead time is fixed
Only one product is involved.

10. Re-Order Point
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It identifies a certain point when to order inventory.
It help orgainsation to avoid running out of stock.
Reorder point can be identify by two method
o
o
Continuous Review System
Periodic Review System

11. Safety Stock
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Additional Inventory to meet average demand during lead time.
It protects companies from any uncertainty in demand and lead
time.
•
Balance the cost of stockout against the holding cost of extra
inventory.

12. CASE STUDY

13. Case Study - Domino’s Pizza
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Domino’s Pizza started its operation in 1960.
In Sep, 2012 they achieve 10,000 outlets in the world.
In 1999 Company sold 360 Million Pizza in USA market and
reached $3.36 Billion in sales.
•
They have 18 distribution centers which cover 4,500 outlets.
http://www.retailsolutionsonline.com/doc/supply-chain-management-helps-dominos-deliver-0002

14. Problems
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Issues in maintaining stock.
Issues of vendor Ordering.
Orders requirement of Outlets.
Not following a safety stock procedure.
Expire product inventory Issues.

15. Possible Solutions
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Implement a e-SCM system.
Formulate Inventory System.
Formulate Ordering System.
Generate safety stock.
Forecast requirement of inventory.
Integrate store inventory system with sales.

16. Conclusion
“Effective E-SCM techniques can play vital role in
managing the business efficiently and it also provide
opportunity to create better business relations with
outside suppliers and departments within the
organisation.”

17. References:
EOQ: http://en.wikipedia.org/wiki/Economic_order_quantity
Methods to manage:
http://smallbusiness.chron.com/top-ten-ways-manage-inventory11099.html
Reorder Point
http://docs.oracle.com/cd/A60725_05/html/comnls/us/inv/roplan.htm
http://en.wikipedia.org/wiki/Reorder_point
Saftey Stock:
http://accountingexplained.com/managerial/inventorymanagement/safety-stock
http://www.businessdictionary.com/definition/safety-stock.html
Case Study:
http://www.retailsolutionsonline.com/doc/supply-chain-managementhelps-dominos-deliver-0002

18. Thank You !