Recent years, inventory starts to play a dominant role in supply chain management determining the main management strategies and techniques. Modem supply chain management is aimed to help organizations deliver services at the best possible and cost effective way. Customers and products are separated in time, space, and ownership. The conduct of human activities presupposes the availability of an appropriate assortment of goods and services. Channels of distribution bridge the separations and support our life style. In a broad sense, channels are composed of middlemen and facilitating agencies wholesalers, retailers, financial institutions, and transportation agencies.
In inventory, a special attention should be given to process. Supply chain decision influence prices, middlemen activities, and margins. They strongly affect inventory situations and production fluctuations, as well as marketing policies in such areas as advertising, branding, product lines, personnel selling, and physical distribution. Yet channel selection often receives less attention than such areas as the allocation of advertising budgets or the motivating of salesmen. Although a continuing task, channel selection is often treated as a decision to be made once for a relatively long period of time. Whereas channel decisions usually involve long-run commitments, channel policy is not irrevocable. It must be reviewed and changed to improve efficiency. The wrong channel choice can severely handicap a program, especially for a new product, and yet switching channels is not likely to be a frequent occurrence because it is a disruptive and costly undertaking (Cohen and Roussel, 2004). These decisions govern and affect other aspects of the marketing mix, including physical distribution, personal selling, advertising, credit, sales promotion, and product service. Through time, changes in the channels of distribution are not readily made, though, in theory, managers should continuously evaluate pertinent factors and select and shift channels accordingly (Chase and Jacobs, 2003).
Notwithstanding, supply chains are shaped by changing demand configurations and current business structures. The alternative policy is to join short time and long time product lines and propose them in one menu. It will help to meet the contract and deliver the heist possible quality of services. The concentration or diffusion of states and customer wants and needs affect menu selection. In most situations, however, the choice is neither direct nor simple. Workable rather than optimal choices must be made because of the lack of complete information. Since existing alternatives present limitations and the wisdom of decisions is determined by unpredictable future events and long-run commitments, management must deal with expectations. Nevertheless, the consideration of channel factors can make the decision a very logical one. Thus, channel analysis and evaluation is important; it is part of the marketing audit. Adjustments must be made continuously, based on criteria of channel performance (Purchasing Harding, n.d.).
New techniques in supply chain management and inventory are RFID (radio frequency identification device) technology and information-based supply chain. The best choice varies with both the restaurant and market situations. Developing a balanced, smoothly functioning and efficient channel is a demanding task. It is based on considerations of markets, products, customers, company constraints, information about competition, current business practice, and feasible alternatives. Basic to all factors are cost-revenue considerations. A distribution channel may be a complex network. It can comprise a number of separate and distinct organizations that have independent legal and functional status. Yet their activities are coordinated to form a vertical system that seeks joint opportunities in the marketplace. A channel is thus a super organization, an ecosystem, governed not only by desires of producers and middlemen but also by consumers and socioeconomic environment. Because supply chain involves changes in numerous functions and organizations, it is important to consider the sensitivities involved with this controversial subject matter.
Value delivered lies not only in what is done at each stage but equally in how the stages are connected to each other. Undoubtedly, early stages of the chain limit the potential of later stages. A poorly-designed product severely constrains how much value can be built into it, just as there is only so much marketing one can do with a poorly-made product. However (and this is the core of our argument) a well-designed product does not necessarily result in a well manufactured and made one. Even if ninety percent of a product’s or service’s quality sprang from its concept and design, the other ten percent could mean the difference between top-notch and second-rate final quality. Granted, quality as designed is an important determinant of final quality and it could be crucial to newly-introduced products since unexpected defects and malfunctions may have to be designed out. But as products mature, competitors come out with copycat offerings, and in general, design know-how gets diffused across the industry, value construction tends to emerge as the determinant both of quality delivered to customers and of quality differences among competitors. A poorly designed product, therefore, will almost certainly be deficient in quality. A well-designed product, on the other hand, is no guarantee of superior quality. Having stated our stand on the strategic importance of quality constructed into the product, we return to our assertion that the nexus of setup, processing, or scheduling times can have a strong impact on quality (Naylor, 2002).
Acceptance of the inventory philosophy demands changes in organizational structures, and quite possibly an organizational revolution will ultimately result from its widespread acceptance. Much organization thought dwells on such concepts as the centralization of business management. Moreover, the viewpoint of the firm in its socioeconomic system, with interdependent and interacting elements dominated by the consumer and shaped by competitive action, creates new organizational problems.
References
Chase R.B., Jacobs R.F. (2003). Operations Management for Competitive Advantage, Hill/Irwin; 10 edition.
Cohen, S., Roussel, J. (2004).Strategic Supply Chain Management McGraw-Hill; 1 edition.
Naylor J. (2002). Introduction to Operations Management, 2nd Edition Pearson Education.
Purchasing Harding. (n.d.) (Chapters 1- 4, 8-10), PowerPoint slides. Colorado Technical University