Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by an enterprise. In other word, inventory is stored accumulation of material resources and physically located that are used in a transformation process and/or activated as asset.
On the other hand, Store is an establishment that stocks goods for sale to customers/consumers or gathers materials for the purpose of using as an input for production processes. Enterprises build stores to ensure a balanced flow of materials in order to keep the business running.
Effective Store or Warehouse Management is a key part of the supply chain and primarily aims to control the movement and storage of materials within a store or warehouse and process the associated transactions, including shipping, receiving, put-away and picking.
Many enterprises spend a lot of time and efforts for developing sales projections and budgets for expenses. Each month these forecasts are compared to actual sales and expenses. If sales are lower, or expenses higher than what was projected; management usually takes corrective action to ensure that the company remains profitable. Unfortunately, few enterprises maintain budgets and projections for what is probably their largest asset, inventory. It is also noticed that many enterprises do not give due importance in maintaining proper utilization of store or warehouse where inventory is kept or preserved.
An organization's inventory can appear a mixed blessing, since it counts as an asset on the balance sheet, but it also ties up money that could serve for other purposes and requires additional expense for its protection. Besides, enterprises sometimes make store or warehouse without doing proper analysis and thus some portion of that store or warehouse remain unutilized.
Some organizations hold larger inventories than their operations require in order to inflate their apparent asset value and their perceived profitability. The hottest buzzword in inventory these days is zero inventory. It’s a cross between absolute zero and the speed of light. Neither is truly attainable in many cases.
Many enterprises have limited funds available to invest in inventory. We cannot stock a lifetime supply of every item. In order to generate the cash necessary to meet expenses and earn a profit, we must sell the material we’ve bought or produced. The inventory turnover rate measures how quickly we are moving inventory through our warehouse or store.
Considering this reality, many enterprises recognize that they need to know how to control and manage their largest asset, inventory. They also now realize that effective utilization of store or warehouse can contribute a lot to the organization. Inventory can be transformed back into cash through sales. Organization cannot be successful (or perhaps even survive) unless it understands this relationship and its details processes.
Conventional knowledge is sometimes unable to detect whether we should keep too little inventory or too much inventory or maintain just the right amount of inventory. Thus we need to make in-depth analysis of total supply chain process to ascertain optimal inventory. Effective inventory and store management is inevitable for today’s competitive business world. Please keep in mind, “It’s easy to turn cash into inventory, but the challenge is to turn inventory into cash”.
Please combat this challenge and learn Inventory and Store Management and contribute to your organization you work or you own.
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Shankar Kumar Roy
Adviser (Research and Planning)
Mr. Shankar Kumar Roy is currently employed as adviser (Research and Planning) at M.I. Cement Factory Ltd. (Crown Cement). Before joining at Crown Cement, he had served at Holcim Cement (Bangladesh) Ltd (Holcim) and its previous organization Hyundai Cement (Bangladesh) Ltd for more than 16 years and lastly he was holding the post of General Manager-Business Development at Holcim. During this long service period at Holcim, he had performed a wide variety of responsibilities, which includes Logistics, Procurement, Supply Chain Management, CSR, Marketing, Communication, ISO Management System, Project Management, Business Planning, Business Risk Management, Environment, Safety, and Business Development etc.
Apart from these functional activities at HBL, he is a certified trainer of Project Management Approach (PMA) of HBL, works as a Management Representative (MR) of ISO 9001, ISO 14001 and OHSAS 18001. Mr. Roy also undertakes full responsibility as a coordinator of “Holcim Awards for Sustainable Construction”, a global competition on Sustainable Construction. Besides, Mr. Roy is holding the post of member of Executive Committee (EC) of Switzerland Bangladesh Chamber of Commerce and Industries (SBCCI), Dhaka and the President of Supply Chain Alumni Society (SAS), Dhaka. He is also the life member of Niketon Welfare Society, Gulshan, Dhaka.
Outside HBL; Mr. Roy imparts training on Supply Chain Management (SCM) of ITC/UNCTAD/WTO course at DCCI on regular basis. He is also a regular trainer at BDjobs.com training center, CSDC (Chittagong Skill Development Center), Rapport Bangladesh Ltd, ACI, Squire, Nitol-Niloy Group, URS, BRAC, and ICDDRB. Besides, he also delivers lectures on Management Systems, Sustainable Development, CSR, Customer Relationship Management, Branding and Communication and others at various seminars and at private universities.
Mr. Roy did his M. Com. (Post Graduation in Commerce) from University of Dhaka in 1983. He obtained the degree of Certified Environmental System Manger (CESM) from NERP, USA. In 2011 Mr. Roy obtained International Diploma on Supply Chain Management (SCM) from ITC/UNCTAD/WTO, Geneva, Switzerland. During his long service career, he attended various training courses, ToT program and seminars and traveled extensively at home and abroad (Switzerland, Spain, Italy, Thailand, Singapore, Indonesia, Malaysia, Sri Lanka, China, Myanmar, Vietnam and Nepal) in the areas of Business Planning, Business Risk Management, CSR, Project Management, Environmental Management System, Marketing and Communication, Negotiation Skill, Sustainable Development, Fair Competition, Supply Chain Management, Aggregate & Construction Material etc. Mr. Roy has more than 28 years job experiences in leading multinational and national companies. Mr. Roy started his career in 1983 at Al-Amin Sea Trans Ltd – one of the then largest Shipping organizations in Bangladesh. Subsequently he worked at American Express Bank, Khansons Group, Trans Maritime International Ltd, Prima Maritime Ltd and Multimode Group and Hyundai Cement (Bangladesh) Ltd.
Mr. Roy also authored various articles on Cement Industry, CSR, Sustainable Development, Environment, Safety and others for national dailies in Bangladesh, Newsletters of HBL and Holcim Group.