Inventory Management in India

Inventory management in India is quite an important factor for the companies that are looking for efficient working capital management. In India, the level of inventory is apparently substantial.

The principal causes behind this can be categorized into the following types:
The purchase staff are seriously fined for stockout situations, however, they are not asked anything regarding increased level of inventories
Previously, prolonged and awkward import processes propelled the companies to maintain large volumes of inventories for imported articles
It pays off if inventories are maintained at high level simply due to the reason that prices go up as a result of inflation.
The majority of sellers are not dependable with regards to delivery plans, as well as the quality of the supplies provided by them. Therefore, the companies hold huge volumes of safety stocks
Because of absence of benchmarking, there lies a wide range of inventory .
The most fundamentally utilized devices of inventory management in India are the following:
ABC Analysis: Despite the fact that ABC analysis is used to a substantial extent, frequently it is witnessed that the ABC categorization is not re-examined and updated on a regular basis.
Inventory Turnover Analysis: This type of analysis is performed at a total level
FSN Analysis: In order to regulate inventories, the companies categorize the articles into slow moving (S), fast moving (F), and non-moving (N) classes. Regrettably, the companies are not discarding the non-moving articles in a smooth manner.
Following are the domains where inventory management in India can improve in a number of modes:
Effective computerization: The computers should not be utilized only for accounting functions. They should also be implemented for quality decision making
Review of categorizations: FSN and ABC categorizations should be brushed up sporadically
Improved co-ordination: Increased co-ordination among production, purchase, finance and marketing divisions would facilitate accomplishing higher degree of effectiveness in inventory management
Disposal of surplus/obsolete inventory: The methods for disposal of surplus and obsolete inventories has to be made simple
Growing long-term relationships: The companies in India should try to grow an extensive association with the sellers. This will enable the companies to enhance quality and distribution
Acceptance of challenging models and standards: The companies have to create standards with international contenders and should utilize concepts like JIT for improving inventory management

 

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Last Updated on : 27th June 2013

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