Inventory Management and the Theory of Constraints Essay (Critical Writing)

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Case study reflections

From the given case study, it is evident that inventory management in the context of an industry usually refers to the management of material resources that can help an organization to generate revenue both at present and in the future. The person responsible for this part of management is the Operations Manager. For example, a retail store that sells various items such as packaged foods, groceries, clothes and electronic goods does not usually store all the products in the store. Part of the product inventory is kept in a warehouse or depot (Kontus 249). Hence, inventory in this case refers to the sum of products in the store and warehouse.

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Inventory management

Inventory management is such an important undertaking in organizations. A case in point is the management of materials within the aerospace industry. Companies that act as manufacturers or assemblers in the production of goods depend heavily on a well-managed stock due to several reasons. Ultimately, a company that relies on production cannot survive without a good inventory management system.

Principles of inventory management

It is crucial to investigate some reasons for instituting a good inventory management system. Although the case study explores the undesirable effects in material management, it fails to point out that inventory management assists in meeting steady demand both at the stage of production and consumption. The demand for specific goods and services can hardly be the same throughout the year. For instance, the sale of air conditioners has peaked during the summer and goes down when winter strikes. Clothing materials are also affected by seasonal demand namely short summers and long, warm winters. A well-planned stock will allow a company to fulfill market requirements. We ought to appreciate the fact that the key to increasing revenue relies on meeting the demand.

Second, continuity of operations is an invaluable role played by effective management of inventory in organizations. Articulate inventory management allows a company to execute its operations smoothly with continuity. For example, if an organization makes products that rely on raw materials, it is obvious that it needs a good supply of raw materials for operations to continue without any hitch.

Benefits/merits of effective inventory management

The economy in operations is also another benefit of inventory management for aerospace companies. A well-managed inventory system allows a company to cut costs. For instance, when the holiday season arrives and an organization expects an increase in demand for some products (such as chocolate at Easter or toys during Christmas), it can purchase goods in large quantities in advance, negotiate prices and store them in readiness for the season. The main benefit of this exercise is that the company can meet all demands and when it buys in bulk and a planned manner (Kontus 250).

The authors in the case study have tackled conflicting material management behaviors or root challenges of material management. While the discussed problems are real in the operations of most organizations, they can be eliminated or minimized if principles of inventory management are adopted. One of the cons of the case study is that it does not explicitly explain the main principles of inventory management that aerospace industries can adopt to improve productivity or returns.

The following practices can help a company to have a well-managed stock at its disposal. To begin with, the management team charged with the role of handling materials should be in a position to forecast demand. This is a specialized skill. A company should be able to predict the demands of specific goods and products at a specific time of the year. An organization may establish and maintain its inventory system based on both actual and projected demands (Kontus 248).

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System monitoring has also not been addressed by the authors in the case study. The concept of reality tree should incorporate the ideal of monitoring and evaluating an inventory system set up by an organization. An inventory should have several monitoring mechanisms in stock at all times. A company should exactly know the amount of inventory at any given point in time.

In regards to a quality warehouse, it is vital to mention that the latter should be able to keep the available stock in good condition. Wasted materials generate losses and consequently minimize opportunities and revenues. Effective stock management is a major challenge in most companies. Even before an organization kicks off its sales, profit or loss margins can be partially explained by how well the company can manage its inventories.

Stock management is an essential tool that supports the main purpose of every business (profit and customer satisfaction. Efficient inventory control can often lead to best practices. Besides, inventory management that has been done properly can address some key queries regarding inventory management. Where should the available materials be stocked? The management should assess the physical space of the storage area, choose the most appropriate environment that can optimize storage condition, enhance visualization, and facilitate access as well as control of supplies. As much as anything can be stored within the available space, it does not imply that storage of everything is necessary. It is pertinent to consider the risk of leftover materials that may not be adequately valid or perhaps out of fashion (Kontus 246).

It is indeed factual that time is a crucial component in the aerospace industry. This explains why effective inventory management can improve both the productivity and profit margin of a firm that is bound by time. Apart from the advantages of inventory management listed in the case study, it is pertinent to mention that this practice facilitates the proper use of business capital. It also avoids delays in the supply of materials and components since it addresses the needs of sales in the demand measure. It equally assists in preventing obsolescence and deviations of products and materials as well as adapting to the supply quotas. The management can also release productive spaces by identifying products that are not working. After careful monitoring and evaluation of the inventory, it is possible to understand the influence of a given stock based on financial results.

Theory of Constraints

The Theory of Constraints (TOC) as explained in the case study presents several pros and cons, especially when integrated with the key principles of inventory management (Chou, Lu and Tang 4686). One of the pros of this theory is that it offers a holistic approach to managing organizations. Thousands of companies have implemented the theory across the globe. TOC has established itself as a humane, effective, and efficient way of managing organizations bearing in mind that it seeks better operational and financial performance using the same existing resources. The theory also provides solutions, processes, tools, and concepts that are significant in improving the operational and financial performance of a firm by using the same existing resources (Chou, Lu and Tang 4688). The latter is a major challenge in today’s complex business environment. On the other hand, the major con of the theory is that it cannot be used in isolation or independently in managing organizations. Hence, it is limited to some extent in terms of practical application.

Works Cited

Chou, Ying-Chyi, Ching-Hua Lu, and Ya-Yun Tang. “Identifying Inventory Problems in the Aerospace Industry using the Theory of Constraints.” International Journal of Production Research 50.16 (2012): 4686-4698. Print.

Kontus, Eleonora. “Management of Inventory in a company.” Ekonomski Vjesnik 27.2 (2014): 245-256. Print.

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IvyPanda. 2021. "Inventory Management and the Theory of Constraints." January 27, 2021. https://ivypanda.com/essays/inventory-management-and-the-theory-of-constraints/.

1. IvyPanda. "Inventory Management and the Theory of Constraints." January 27, 2021. https://ivypanda.com/essays/inventory-management-and-the-theory-of-constraints/.


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IvyPanda. "Inventory Management and the Theory of Constraints." January 27, 2021. https://ivypanda.com/essays/inventory-management-and-the-theory-of-constraints/.

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