Inventory is important to the supply chain, yet it is not universally well understood. It is considered as an economic asset to a non-income-producing use of capital funds. It is characterized, both positively and negatively in the aforesaid sentence. Only when considered in light of all quality, client service and economic factors—from the viewpoints of purchasing, manufacturing, sales and finance—does the whole picture of inventory become clear. Effective inventory management is essential to supply chain competitiveness.
Inventory refers to a list of goods and materials, or those goods and materials themselves, held available in stock by any business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. In simpler words, inventory means store of goods that is held for some purpose or use. Inventory maybe kept “in house,” meaning in the premises or nearby for immediate use; or it may be held in a distant warehouse to be used in the future. Firms that utilize just-in-time methods, more often than not, the term “inventory” implies a stored quantity of goods that exceeds what is required by the firm to operate at the current time. (E.g., within the next few hours)
Every business organization considers inventory as the asset that provides sustained competitive advantage in the business environment. Changes in the business environment have led to increased importance of managing inventory. The changes that have brought great concern in the business environment includes an increase in globalization, changing demographic patterns, diversified cultures, changes in the economic variables, changes in sociology and the advancement of technology in the global scenario. Thus the role played by inventory management in small-scale business is of great importance.
Internationally, most small-scale businesses have adopted various techniques of enabling sustained supply of their products even to the remote most parts of the globe. This has led to a wide sourcing of products internationally (Gordon et al., 1982).
Manufacturers of products have played a great role of providing their goods to all parts of every continent. Through this international break, complex networks of international alliances have been developed. These have spread the advantage of expertise and offering of particular products for participants in the small-scale business. Internationalization has therefore provided a number of services such as lowering of psychological barriers, increased awareness of opportunities other markets and an increased international small-scale business expertise. Regionally, the impact of a single global market has taken face with the ever-changing business environment. Many businesses have been established across the...