Project Materials

EFFECT OF INVENTORY MANAGEMENT AS A KEY TO ORGANISATIONAL EFFECTIVENESS

ABSTRACT

The research of the influence of inventory management as a key to organisational effectiveness used Grand Oak Ltd as a case study to analyse the impact of proper inventory management on organisational performance. The study was conducted using research methods, specifically case studies. The study’s population is 100. Data were gathered using questionnaires, interviews, observation books, journals, and the internet. Data are generated as percentages. The findings suggest that there is a considerable link between competent inventory management and organisational effectiveness. The study concluded that inventory management is critical to an organization’s performance and growth since an organization’s overall profitability is linked to the volume of product sold, which is directly proportional to product quality.

Chapter one

INTRODUCTION

Inventories are critical to the smooth operation of industrial and service organisations. They may include raw materials, work-in-process, spare parts/consumables, and finished goods.

It is not necessary for an organisation to have all of these inventory classes. However, regardless of the inventory items, they require efficient management because they account for a significant portion of the company’s funds.

Different departments within the same organisation take different approaches to inventory. This is mostly because the specific functions provided by a department determine its motivation.

For example, the sales department may seek a huge stockpile in reserve to meet nearly any demand that arises. Similarly, the production department would request material inventory to ensure that the production system functions smoothly. On the other hand, the finance department would always agree to a minimal equity investment so that the funds may be used for other, more beneficial objectives.

According to Temeng et al. (2010:195), historically, organisations have overlooked the potential savings from efficient inventory management, viewing inventory as a necessary evil rather than an asset that requires management. As a result, many inventory systems operate on arbitrary rules.

Unfortunately, it is not uncommon for certain organisations to invest more dollars in inventory than is necessary and still fail to meet customer expectations due to inefficient investment distribution among inventory products.

Based on the preceding analogy, this paper evaluates inventory management and organisational effectiveness in manufacturing organisations.

1.1 Statement of The Problem

Problems with inventory management and control have existed for a long time. The need to collect products when they are easily available and then store them for times of scarcity is possibly the most fundamental stock keeping dilemma that man has addressed for a long time.