The Silver Myth of Inventory Management

Inventory, being the most exposed asset in conventional accounting system, pose a great deal of threat to accountants, financial supervisors and stock controllers. Interesting to know; it is the most uncontrollable entity on the part of supply chain experts. The two great challenges popping up again and again are ‘How Much’ and ‘When’? Despite the fact, we all know that the possibility of reaching up to a target of point estimate in forecasting is essentially zero, still we dare to answer aforementioned two questions repeatedly.

Through interactions with various professionals, I inferred that many are focused to learn the ABC of ERP. At least, they develop a great deal of familiarity with interfaces of renowned Resource Planning Software. At the end, I only found few well-versed with the actual concepts of myth called ‘Inventory Management’, others are playing around the words of LFL, POQ, FOQ, Min/Max etc., (to name a few). And this is perhaps because the market is oriented by these buzz words. Organizations are keen to implement those ‘buzz word systems’ without exploring the need of it and you know what ‘more than 50% of the organizations want to execute the Financial module at the very onset’.

Another interesting feature of ‘to be controlled inventory’ is happened to be in the department by accident/formal policy measure. ‘I don’t like this department’ but you know as a formal rotation policy I have to be here for at least 12 months. I just want it to pass any way. Great!! Are organizations really knowing this thing happening with their employees as a formal OD/HR policy? Are you ready to waste a million in your stock just to keep the policy running? Certainly the goal of the company is to make money, not to waste money.

Like leadership, inventory managers are not born, it can be learned. Those who love to play with numbers and computations are more prone towards learning the skill of Inventory Management. Those lovers are in love with detailed stock computations. What I observed is: all methodologies yield some positive results. May it be a conventional computation of safety stock or may it be DDMRP, all is not always well with everyone. Opponents and proponents are always busy in capturing wisdom since the inception of Inventory World. I cannot avoid a possibility of hearing a nascent methodology next year that perhaps entails the concepts of all big bangs and God forbid it may yield huge benefits as well.

But one thing I cannot deny; and this happens to be a significant relationship of Inventory Management with Statistics/Mathematics/Programming. And this certainly reinforces the idea of silver myth i.e.“you can't manage what you can't measure’’ (Peter Drucker).

This article was presented by:

Farrukh Iqbal, CSCA, CSCM, CSSBB, CSSC

The opinions expressed in this article are those of the author.

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