2.0 is left unattended to. The section

Many previous studies have been conducted by different researchers relating to inventory management in relation to company performance. In this section, various literatures will be reviewed with the aim of getting a clear and deeper understanding of the research topic. The aim of the section will be to see the various aspect of the business that can be affected in the case where inventory management is left unattended to. The section will as address the various measurement of inventory management that can have an influence on company performance as brought out by several studies.
According to Halachmi and Bouckart (2005) “the aim of inventory management is to maintain the quantities of stock held by a business at a level which optimizes some management criteria such as minimizing the costs incurred by the whole business enterprise for improved performance”.
Performance is a measure of the results achieved. Performance efficiency is the ratio between effort extended and results achieved, according to Malcolm, S. (2005). Performance can be measured by obtaining the magnitude of a quantity, such as length or mass, relative to a unit of measurement, such as a meter or a kilogram. Inventory management challenges can interfere with a company’s profits and customer service. They can cost a business more money and can lead to an excess of inventory overstock that is difficult to move. Most of these problems are usually due to poor inventory processes and out-of-date systems, Gourdin et al(2001).
Inventory Management is a process performed by almost all companies and organizations as the absence of inventory management may lead to loss of sales and customers in times of high demand. It can therefore be said that failure to manage inventory effectively can have a significant impact on a company’s performance and growth. According Coyle et al (2003), he emphasizes on the importance of inventory on the balance sheet, as he states that, “Inventory is an asset on the balance sheet of companies has taken an increased significance because of the strategy of many firms to reduce their inventory in fixed assets that is plants, warehouses, office buildings, equipment and machinery. Another importance of inventory can be placed on its ability to guard against stock outs costs. This cost is incurred when a customer’s demands cannot be fulfilled because the inventory is completely depleted. It refers to the disrupted production when materials are unavailable. In many instances, demand rates and delivery times are subjected to variability. According to Gaither (1996),Stock outs can be due to higher than average demand rates and longer than the normal delivery times.He again identifies another importance of inventory as, to maintain flexibility in scheduling. Here, costs and complexities related to scheduling personnel and equipment sometimes make it desirable to produce at times and quantities that do not directly correspond to the current demand. The ability to produce goods for inventory instead of directly for customers gives managers greater flexibility in scheduling.
There are various reasons as to why firms and companies keep inventories or rather stock certain products. Reasons for maintaining inventories:
1. Demand
A retailer stays in business when he/she has the product the customer wants on hand when the customer wants them. If not, the retailer will have to back order the product. If the customer can get the goods from some other source, he or she many chose to do so rather than wait than wait in order to allow the original customer to meet demand later (through back-order). Hence, in some instances a sale is lost forever if goods are not in stock.
2. Running Operations
In order to manufacture a product a manufacturer must have certain purchased items (raw materials component or subassemblies). Completing the production of finished goods can be prevented when a manufacturer is running out of only one item. Inventory between successive dependent operations also serves to decouple the dependency of the operations. A work-center often depends upon the previous operation to provide it with parts to work on. If work stops at awork-center, all subsequent centers will shut down for lack of work. Each machine can maintain its operation for a limited time, hopefully until operations resume at the original center if a supply of work-in-progress inventory is kept between each work-center (kuku, 2004).
3. Lead Time
Lead time is the time that elapses between when order is placed (either a production order issued to the factory floor or a purchase order) and actual time goods ordered are received. If an external firm or an internal department or plant (supplier) cannot supply the required goods on demand, then the client firm must keep an inventory of needed goods. The larger the quantity of goods the firm must carry in inventory depends on the longer the lead time.
4. Hedge
Inventory can also be used as a hedge against price increases and inflation. Before a price increase goes into effect, salesmen routinely call purchasing agents. According to kuku (2004), this gives the buyer a chance to purchase material in excess of current need at a price that is lower than it would be if the buyer waited until after the price increase occurs.
5. Quantity Discount
Purchase of large quantities of goods often times attracts a price discount to the firms. This also frequently results in inventory in excess of what is currently needed to meet demand. However, the decision to buy in large quantities is justifiable if the discount is sufficient to offset the extra holding cost incurred as a result of the excess inventory.
6. Flexibility Of Inventory Service
Flexibility of inventory service provides an organization with the ability to keep inventory services to an agreed service level in a predictable fashion with acceptable risk and cost. This capability can be tested and valued by customers. Managing inventory to ensure high customer service level is critical in the supply chain.
According to Lieberman et al (2002), however, to maintain assets is very costly. Reflecting the level of availability of inventory to the customers is in three categories namely, raw material inventory, work-in-progress inventory and finished goods inventory. Excess in each side is

2. claiming Just-In-Time, creating those manufacturing system, what’s

2. Critical Evaluation and Discussion
The operations of Nestle might be figured out how subsequently in the direction of growing precisely primary phases inclusive of arranging those capacities, locating the facility, planning those products, requisition from claiming Just-In-Time, creating those manufacturing system, what’s more securing the supply chain management framework. These frameworks and techniques need aid fundamentally recognized with highlight those dialogs in the accompanying region what is more guarantee those shaping for legitimate evaluative seeing diagnosed with the unique divisions of the association.
2.1. Operations Management key issues
Operation management includes the similar manipulate for each enterprise or industrial employer no matter their nature of the operation. Planning, organizing, staffing, tracking controlling, directing and motivating are its substantial elements. Operation control is compulsory for companies to control the everyday activities seamlessly. In the present set up the manner, a company handles its day-to-day operations has had the growing effect on its long-term performance as a consequence growing the sphere of operation method. Operations management greater precisely on supply chain management and logistics.
There are strong parallels among the competencies required for powerful operations management and those needed in each logistics and supply chain management. The operations work in distinctive types of association. It identifies those as a relatable point situated about destinations with which operations managers aim in place should serve their customers. Nestlé managers at all levels are more worried with leading and inspiring people to add value to the Company and society rather than with exercising formal authority. This calls for a high personal commitment of each employee and a common mindset geared towards results.
2.2. Operations Strategy
The operations strategy of Nestle is surprisingly contributed by the application of nutrition, health and wellness strategy. The specific strategy is designed to guide human beings desiring to have a wholesome lifestyle. The operations are designed by means of the practical contributions from innovation, that is continuously driven via the employer through the enterprise-leading studies and development. The entire situation supports the consistent transformation of the food and beverage portfolio of the company.
Other than that, the research and development activities of Nestle are constantly that specializes in exploring the jobs of dietary healing procedures for making sure the development to the health and lifestyle of human beings (Kanapathy, et al., 2016). With the help of those activities, the organisation is growing focusing on developing awareness many of the people from one of a kind community for taking more take care of their health and health components. Therefore, the operations approach of Nestle is basically primarily based on striving to supply a superb effect at the numerous societies the world over concerning their activities. For you to acquire the unique purpose, Nestle constantly shares various insights concerning the worldwide nutrients, health and health challenges, builds superior partnerships with other main agencies, and engages with the policymakers, key leaders, and stakeholders from the specific geographical area of enterprise operations.
2.2.1. The Value Chain of Nestle
Each value adding activity is considered to be a source of competitive advantage. As for the Nestle’s value chain analysis are as per below: –


I'm Casey!

Would you like to get a custom essay? How about receiving a customized one?

Check it out