Inventory Management Practices in Manufacturing Firms

Abstract

Inventories have been described as the lifewire of any manufacturing organization. Inventories represent investment designed to assist in production activities and/or serve customers, without any doubt, inadequate supply of inventories may grind manufacturing operations into a halt. The mode of control and management of inventories can be a crucial factor in the success or failure of any manufacturing concern. For example, insufficient inventory can seriously disrupt the production-distribution cycle that is so crucial to the survival of all manufacturing organizations. On the other hand, excessive inventory can cripple a firm’s cash flow and thus endanger its liquidity position. Either way, poor inventory management can present a serious challenge to the productive capacity of a manufacturing organization.