Assignment Topic: Inventory Management in Practice

CONTENT

One of the most important element in working capital management is the management of inventory.

Maintaining excessive inventory is a practice followed by some organizations. Whilst such mechanism is helpful to capture market share and satisfy customers, it is often considered as an expensive strategy to follow given the cost considerations. On the other hand, some organizations do not maintain excessive inventory and as a result they face frequent stock outs and eventually lead to customer disappointment.

Both high inventory as well as low inventory is detrimental to the organization. Therefore, it is important to maintain the optimum level of inventory in a business. Organizations do follow various mechanisms to manage the inventory, given its importance according to the nature of business and its environment.

You are required to select any business operation engaged in trading or manufacturing in Sri Lanka that maintain inventory as part of the business (Tradable Inventory). Avoid selecting a service oriented organization as they do not usually carry inventory as part of the business. The best industries to select are manufacturing and trading organizations.

You are required to carry out an in-depth analysis of inventory management systems and practices of the organization. You need to interview the people in the organization who are involved in managing inventory in order to complete these tasks. The areas need to be covered in your analysis are as follows.

TASK ONE - Inventory Management

Based on your interview gather and report the following;

1. The inventory management policy and inventory control system in practice within the organization.

2. Who are the people involved in the inventory management process in the organization and identify and explain their roles and responsibilities.

3. Explain the direct and indirect costs associated with the inventory in the organization.

4. What are the mechanisms that an organization follows to monitor the inventory levels of the organization? (E.g.: Reports such as Age analysis, Slow moving, obsolete inventory and Management meetings etc.) What standard operating procedures the organization follow in the event when there are excessive and non-moving inventory?

Apart from above, are there any other actions the organization follows to manage inventory?

Guideline Note - Your choice of organisation is important and hence choose an organisation either in manufacturing or trading businesses.

The inventory in this assignment is defined as "tradable inventory" and not a "nontradable inventory".

• Tradable Inventory: Raw material, finished goods etc.
• Non Tradable Inventory: Stationary, Packing material etc.

Therefore, the focus of the assignment is on tradable inventory

You are not expected to include the any financial or other sensitive (confidential) information of the organisation.

The answers to the above requires interviewing multiple stakeholders in the organisation.

Make your own observations and judgments. Creative thinking and a high standard in presentation are highly recognized.

TASK TWO - Areas for improvement

Based on the information gathered in Task 01, identify the weaknesses in the existing process and provide recommendations for further improvement.

Guideline Note - You need to compare the practices of the organisation with the best practices studied in the class room and provide recommendations for improvement.

Attachment:- Assignment File.rar