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A canned food manufacturer's materials inventory includes the ingredients to form the foods to be canned,[link widoczny dla zalogowanych] empty cans and their lids (or coils of steel or aluminum for constructing those components), labels, and anything else (solder, glue, ...) that will form part of a finished can. The firm's work in process includes those materials from the time of release to the work floor until they become complete and ready for sale to wholesale or retail customers. This may be vats of prepared food, filled cans not yet labeled or sub-assemblies of food components. It may also include finished cans that are not yet packaged into cartons or pallets. Its finished good inventory consists of all the filled and labeled cans of food in its warehouse that it has manufactured and wishes to sell to food distributors (wholesalers), to grocery stores (retailers), and even perhaps to consumers through arrangements like factory stores and outlet centers.
Examples of case studies are very revealing, and consistently show that the improvement of inventory management has two parts: the capability of the organisation to manage inventory,[link widoczny dla zalogowanych] and the way in which it chooses to do so. For example, a company may wish to install a complex inventory system,[link widoczny dla zalogowanych], but unless there is a good understanding of the role of inventory and its parameters, and an effective business process to support that, the system cannot bring the necessary benefits to the organisation in isolation.
Typical Inventory Management techniques include Pareto Curve ABC Classification[2] and Economic Order Quantity Management. A more sophisticated method takes these two techniques further, combining certain aspects of each to create The K Curve Methodology.[3] A case study of k-curve[4] benefits to one company shows a successful implementation.
Unnecessary inventory adds enormously to the working capital tied up in the business, as well as the complexity of the supply chain.[link widoczny dla zalogowanych] Reduction and elimination of these inventory 'wait' states is a key concept in Lean.[5] Too big an inventory reduction too quickly can cause a business to be anorexic. There are well-proven processes and techniques to assist in inventory planning and strategy, both at the business overview and part number level. Many of the big MRP/and ERP systems do not offer the necessary inventory planning tools within their integrated planning applications.