Inventory is one of the most expensive assets representing close to 50% in a myriad of companies across the globe. It covers almost 50% of the company’s invested capital, posing a big concern on its management. Inventory is categorized in different types.
For instance, in manufacturing firms, it is categorized in terms of raw materials such as wood or metals, work in process such as partially completed products and the finished goods. As the company yearns to meet its objectives, it is important that it avails enough cost effective inventory.
Wheeled Coach Industry which is Winter Park Florida based company applies a number of inventory management policies. The company has 7000 parts to keep the stocks which are supplied by different suppliers to ensure that products and custom made ambulances are manufactured in time.
Since products are customized, their production processes are always unique in nature. Therefore, a demand on material planning and processes which primarily involves maintaining proper level of inventory throughout a fiscal year is necessary. This calls for thorough product and components knowledge. Wheeled coach applies a technique referred to as cycle counting which enable the management update quantities on hand to ensure accuracy in the required materials.
Cycle counts also remove any surprise that may come during the course of the year. Examples of wheeled coach inventory includes: truck chassis, aluminum and ply wood. The company has also categorized their inventory at different levels, for instance, inventory in B class which consists of medium costs items such as upholstery for seats, electrical wiring and Plexiglas for cabinets.
Most of these items have a lower dollar value compared to those in A class. Items in C class which consists of nuts, bolts and rivets has the lowest dollar value than B and C. Individuals who are in charge of different inventories always give cycle count on the inventories which are in the warehouse, keenly noting the discrepancies which will be core in analyzing the real value and the perpetual.
Frito Lay
Frio lay has been in operation for over 70 years providing people with snack foods made from fresh and natural ingredients. It produces over 40 unique products. They require four different types of inventory which includes: raw materials such as corn, oil, potatoes and seasonings, Work in process such as snacks in the course of processing, finished goods such as packed snacks maintenance and operating supplies (MRO).
Production process starts from, procurement of raw materials inventory. The company tries to maintain a minimal level of raw materials inventory in store due to their perishable nature. Each truck usually carries 50,000 pounds of potatoes to the conveyor at the dock outside the plant. This frequent delivery is a mechanism to ensure that a low quantity is kept. The conveyer then sets the potatoes either in the store for later use or where they will be washed and later peeled.
At this level, they are no longer raw materials but work in process. As various processes of salting and frying takes place, quality checks are done, at each and every interval. One such check applies a visioning system to capture dark brown or spotted chips and kicks them out which are later used as animal feeds. The finished products are then packed and loaded to various customers since the demand is usually very high. The last inventory the company keeps is the MRO to offset the process interruptions.