Mind Map for Inventory Management

Inventories represent a considerable part of a company’s working capital. Uncertain economic times require the amount of working capital tied up in inventory to be reduced. But managing stock levels is more complex than it seems. In collaboration with Slimstock, Supply Chain Movement has developed a practically oriented mindmap for inventory management which takes you through all the relevant aspects, including warning signs where necessary.

Mindmap manual

Reducing working capital:

In the economic crisis of 2008 and 2009, it was very difficult for companies to obtain loans from banks, who themselves were struggling to survive or even going bust. In times of economic certainty, it is undoubtedly a case of ‘cash is king’. One way of freeing up cash is to reduce the working capital, including by lowering stock levels. During the crisis, many companies reduced their inventories drastically, and sometimes even too extensively which led to them facing stock shortages of essential raw materials when the economy picked up again in 2010. At the height of the recession, ‘Inventory optimisation in 2009’ was in first place in terms of supply chain projects.

Longer supply chains:

In recent years, companies have increasingly relocated their production to, or outsourced it in, the Far East, resulting in longer supply chains. Companies need to manage their inventories much more effectively and forecast demand more accurately. In a global study conducted by consultancy PRTM in 2010, ‘Effective inventory management’ scored 69 percent and ranked top in terms of focus areas for managing supply chain risks.

Increasing competition:

Competition has increased worldwide as a result of globalisation and transparency. This, along with the corresponding rise in customer expectations, has put immense pressure on companies’ margins. As a result of these developments, companies are negotiating keenly with their suppliers to ensure they deliver reliably, including stipulating consequential loss payments if they cannot supply or requiring them to hold more inventory to compensate for low supply reliability.

Download: Mindmap for Inventory Management

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