Discuss the Importance of Collaboration in the Developing of Inventory Strategies
In the business world today manufacturers compete to win and satisfy their customers. The activities of the manufacturers of consumer products include transformation of raw materials and natural resources into finished goods which are supplied to the final consumer. These goods and services will go through a system that combines many variables in order to be moved from the supplier and to reach the customer. The combination of all the activities performed by the manufacturer, through the retailers to the customer determines how the customer receives the product and this will also determine the company’s competitive advantage in the market.
Proper actions and decisions are undertaken in order to account for the customer needs and to meet these needs and preferences. Manufacturers thrive to achieve proper returns on their investments. They look for the cheapest and consistent means of availing raw materials to their production plants, transforming the raw materials to quality goods and services and finally delivering the finished goods to their customers for them to remain profitable (Sahay, 2003).
Companies should come up with better policies in order to manage their inventories properly and efficiently. The supply channels are increasingly becoming long and the level of demand for service by the customer is also becoming tight. As a result, companies are constantly reexamining and implementing better flows of their inventories across all their channels of supply and also in setting better inventory policies.
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In order for companies to come up with better policies in regard to the flow of their inventories, several individuals and organizations need to work together for the common purpose. When several participants come and work together for a common purpose, greater results will be achieved since barriers are eliminated and opportunities for success increased. For business partners in the chain of supply to exist and develop they need to have a competitive edge. This is guaranteed only through collaboration.
In the supply chain inventory, the supplier and consumer involvement in development of all action plans is high and thus the manufacturers should work with the suppliers and consumers at all levels in order to create value. Strategic involvement of the suppliers will provide required flexibility in all operations so that the flow of the products will be more responsive to the customer needs. In the supply chains, if the suppliers are involved in the shifting of inventories upward, the holding cost will be reduced tremendously.
Sharing of information at all levels of the supply chain will reduce inefficiencies Continued sharing of information will ensure that there are enough inventories and reorder points set to ensure stock safety and customer orders are supplied accordingly (Chen et al, 2000). . However, it is not easy to determine the level and manner of collaborations to enter with partners which may lead to abuse by the partners as there is no confidentiality. Collaboration may also lead to low levels of service. Due to the processes involved in consultations and negotiations, the processes of supply may be slow and time consuming.