Inventory is the most important part of the current assets ofa large majority of companies in India and to maintain the inventory, a largeamount of fund is required by the company. Therefore, managing inventoriesefficiently and effectively in order to avoid unnecessary investment is veryimportant. WHAT IS INVENTORY? Inventory is the entire stock of abusiness including: – Rawmaterials – Workin progress- Finishedgoods – Toolsand supplies- Goodsin transitFUNCTIONS OF INVENTORY:1.
To meet the unexpected customerdemand 2. To have smooth production requirement3. To protect that there will be nostock outs4. To hedge against price increasesPurpose of holding inventory:Holding inventories means blockage offunds and the various costs associated with it, but still every business has tomaintain a certain level of inventories to facilitate continuous production andsmooth running of the business. Three main purpose or motives ofHolding Inventory:1. TRANSACTION MOTIVE: Any business maintains inventories to avoid blockage in its productionand sales and by maintaining the business ensures there are no interruption inproduction process thereby, sales are not affected. 2. PRECAUTIONARY MOTIVE: Inventories are also held for sudden and unexpected demand arises forfinished goods.
In this case, the business should have some inventories intheir warehouse to protect against the risk of such unpredictable changes. 3. SPECULATIVE MOTIVE: A business may hold inventory for any future change in the price leveland have extra gain over the inventory in hold. INVENTORY COSTS ARE OF VARIOUS TYPES: 1. Purchase cost: Cost paid to supplier to buy the inventory. 2. Holding or carrying cost: Cost relate to physically havingitems in storage.
It includes: a) Interestb) Insurancec) Depreciationd) Warehousing costs3. Ordering costs: Cost of ordering ad receiving inventory. 4.
Shortage costs: When demand exceeds the supply of inventory. WHAT IS INVENTORY MANAGEMENT? Stock administration is procedure offollowing, administrating and organization of requesting, stockpiling andutilization of materials that an organization utilizes as a part of thecreation of products.INVENTORY MANAGEMENT OBJECTIVES:1. Continuously supply of requiredmaterials.2. Minimize the risk of under and overstocking of material should be minimized.
3. Maintaining the systematic record ofinventory.4. Losses, damages and misappropriationof materials should be less. 5. Cost associated with inventory shouldbe minimized.
ABOUT BIG BAZAAR INDUSTRY Retailing(Hypermarket) FOUNDED 2001 HEADQUATERS Mumbai, Maharashtra, India PRODUCTS Department store PROMOTERS Mr. Kishore Biyani REVENUE Rs. 6000 crores EMPLOYEES 36000 people STORE 216(+) stores, across 90 cities in India. PRODUCTS: SWOT ANALYSIS OF BIG BAZAAR: INVENTORY MANAGEMENT AT BIG BAZAAR:PRODUCT CATEGORIES: 1. APPARELS: Formals and casuals wear,fabrics, jeans and shirts etc.
2. ELECTRONICS: TV, Mobile andAccessories. 3. HOME CARE: Soaps, detergents,cleaning agents. 4. CHILL STATIONS: Beverages and drinks.5.
FARM PRODUCTS: Fruits, vegetables,dairy products. TYPES OF INVENTORIES MAINTAINED:1. CYCLE INVENTORY is conveyedfor the FMCG items and sustenance classification as the turnover of these itemsis high and after a period they get terminated.
2. SAFETY LEVEL OF INVENTORYis kept up for array as the cost is high and they can be held for a more drawnout timeframe. 3. SEASONAL LEVEL OF INVENTORYis received for the items which are sought after for just pinnacle season. HOW INVENTORIES ARE MAINTAINED: The store director checks the stockstime to time and furthermore the requests of the clients. Director keeps upstock-in and stock-out, with the goal that he can choose the level of stock.
The supervisor keeps a beware of the varieties in the necessity of inventorieseg., array are requested around following 45 days and for each example theyhave move down of 10 pieces.However, if there is a requirement of more pieces,they first ask other stores of Big Bazaar and if they fail to meet the demand,they go for “Transfer of Interest”. REORDER POINTS OF INVENTORIES: As such there are no reorder points. Requestsare put as and when required with the exception of in a couple of things: · Apparels:requested once their stock fell underneath 4 for every piece. · Generalstock: Includes nourishment and non-sustenance things, it is 7 days. · Vegetables:gone up against regular routine from nearby merchant.
INVENTORY MANAGEMENT OF PERISHABLE GOODS: Perishable merchandise like vegetablesare kept up with care. Vegetables are purchased on regular routine based onrequest, and occasional thing. It is additionally found out that harmedvegetables are sold requiring little to no effort to some different channels.
STOCK MANAGEMENT OF IMPERISHABLE GOODS: Perpetual merchandise like utensilsand staple products and electronic things are brought from their particularconveyance channels. From that point products are provided to each Big BazaarStore. The methods of transportation which are utilized as a part of inventorynetwork process are Truck and Rails, yet in the event of crisis, flights areadditionally being utilized. NATURE OF FOOD-ITEMS: There are better places to keep thesustenance things both in stock and at store. Things are required to kept atfrosty spots, similar to cool beverages, drain items, organic products and soon are kept in fridges and those which can be kept anyplace, are kept inappropriate racks.
CONCLUSION:Inventory management is a vitalfunction that helps and ensures the success of Big Bazaar. Successfulimplementation of inventory will improve the entire business significantly. Thegoal of good inventory management is not perfection but improvement. Theseimprovements should be of permanent basis not be viewed as a short term effort.The ROI of stock administration will be found in the types of expanded incomeand benefits, and a general increment in consumer loyalty.