In this increasingly globalized world, a deep understanding of the mechanics of the world’s trade infrastructure is vital for today’s business leaders. One critical feature of that infrastructure is the supply chain, which the consulting firm McKinsey & Company defines as “all the raw materials and parts that are made into a product and distributed up the chain for manufacture and sale.” Learning how to manage the distributed components of the supply chain so that businesses can meet consumer demand is a key challenge, especially in times of global volatility and rapid change.
Fortunately, the University of Texas (UT) at Tyler’s online Master of Business Administration (MBA) with a Concentration in Supply Chain Management program unites foundational business concepts with specialized logistics knowledge, such as inventory management, to provide aspiring business leaders with a robust intellectual foundation. No matter the roles graduates pursue, this program provides relevant skills, since the supply chain impacts all sectors of the modern economy. Graduates gain extra perspective from which to influence long-term strategies for logistical success at their companies.
What Is Inventory Management?
While the supply chain is a broad concept, inventory management refers to a specific skill within the broader field of supply chain management. According to Investopedia: “Inventory management refers to the process of ordering, storing, using, and selling a company’s inventory.” This can include everything from raw materials to finished products and also encompasses warehousing and processing. “There are different methods of inventory management, each with its pros and cons, depending on a company’s needs,” states Investopedia.
The specific steps business leaders take to manage their inventories can differ based on their business type. For example, companies that supply their products on-demand begin their inventory management from the moment a customer places the order, according to NetSuite. However, for companies that do not produce on-demand, inventory management starts with forecasting the demand for a product and purchasing raw materials or other components. “Other parts of the process include analyzing sales trends and organizing the storage of products in warehouses,” states NetSuite.
How to Improve Inventory Management
Inventory is both a valuable asset for a company and a potential liability. Thus, properly managing an inventory is key to avoiding necessary costs. “Knowing when to restock, what quantities to purchase or produce, and when to sell and at what price can easily become complex decisions,” according to Investopedia.
One key step in the inventory management process that could lead to substantial improvements when done correctly is cycle counting, which is “a method of checks and balances by which companies confirm physical inventory counts match their inventory records,” according to another NetSuite article. Cycle counting is an essential way of ensuring that a company’s inventory is accurate, and it helps keep track of potential error sources, as the Purchasing & Procurement Center points out. Likewise, inventory turns and stock rotations are key metrics — especially in certain industries like pharmaceuticals, foodstuffs and chemical warehousing.
Earn Your MBA in Supply Chain Management
The scale of contemporary globalized supply chains can seem daunting. However, UT Tyler’s online MBA with a Concentration in Supply Chain Management program helps professionals understand and use supply chains to help a business succeed. UT Tyler’s online program offers courses like Warehousing, which teaches students the fundamentals of organizing, stocking, inventorying and much more. The Logistics Management course allows students to study industrial distribution, emphasizing the “financial processes involved in getting a product from the point of manufacture to the point of use.”
While there are many possible methods of inventory management, the most important element is having a broad knowledge of business principles so that leaders can apply the right strategy at the right time. As Investopedia points out: “There may not be one perfect type of inventory management because there are pros and cons for each. But taking advantage of the most appropriate type of inventory management can go a long way toward ensuring a company’s success.”
Learn more about UT Tyler’s online MBA with a Concentration in Supply Chain Management program.