The conflicts among the functions are nothing new. Production efficiencies require long production runs, which, in turn, result in large inventories in single items. (Ford would say, "Any color you want as long as it's black.") Marketing and sales wants to be able to provide customers with any product and service they require, thus implying large inventories of every possible product configuration. {"Yes! We can have those 10 million units of magenta, left-handed golf gloves for you this afternoon!") The financial managers wish to minimize the investment in inventory because of the cost of capital and the return on assets-the higher the inventory, the larger the capital costs and the lots of return on assets.
A major role of the inventory control manager is, therefore, the establishment and maintenance of communications channels with the functional groups as well as with the rest of the physical distribution activities, warehousing, traffic and transportation, analysis, and administration. Such liaison activity requires considerable patience and excellent interpersonal and communication skills.
Starts with the basics-making or selling product. Movement upward rapidly into management and control.
Focuses on one product area, writes production orders, expedites production orders, handles manufacturing relations, straight mathematical application of Economic Order Quantity (EOOJ, maintains records on inventory counts. First person to get yelled at for stock out.
Responsible for a product line, relations with marketing and distribution center people, as well as manufacturing application of EOQ, tempered by experience and demand forecasting. Maintains forecasting system and inventory records. (Gets all the screaming referrals.)
Lives or dies by efficient operation of actual distribution function. Coordinates total distribution system. Analyzes information presented by other logistics segments, such as inventory control, traffic and transportation, planning/analysis, customer service, and others. Mostly concerned with long-term planning and grave distribution inefficiencies. (Most likely to lose a letter in the mail.)
They successfully supply customers. The analytical processes and systems have increasingly made use of computer technology. This trend toward using computers for the development of cost optimization models combined with inventory record keeping will continue rapidly. Furthermore, the scope of inventory management is expanding to include raw materials and supplies as well.
As with other areas of physical distribution, the increased attention of upper management on costs makes the inventory control function increasingly important and visible.
Question - How did you get into the field?
Answer - I first got into this field through the area of logistics planning. Logistics systems planning was more of an ivory tower position in that we did studies, but weren't real-world-oriented with applications. Inventory control is one of the areas within logistics, and logistics encompasses the entire pipeline from raw materials through to customer delivery. Over the past two years, I've honed in on the area of inventory.
Quite honestly I got into this by accident. I majored in marketing in college, and when I got out I got a job with a company as a marketing analyst and did a lot of statistical work, such as graphs and sales analysis. It was fascinating, but it really wasn't what I wanted. I heard about a job opening, and they explained to me that it would be an inventory job. It dealt a lot with the marketing and sales people in terms of sales forecasting. It required some marketing ability or selling forecasting ability to properly manage an inventory. Now, to me inventory was always boring, but I guess they did a good selling job on me, so I said that I'd like to try it. I spent six years there and liked it very much.
I was part of an accounting department and got involved with production inventory control as a raw material coordinator. Production inventory control was one of the first areas to be automated from a data standpoint in manufacturing organizations. In our company I was the individual selected to do all the implementation. From there I became a manufacturing consultant or liaison with the data processing group. I traveled to the manufacturing operations putting in production inventory control systems. From this we developed into the present materials management functions.
Question - How do you explain your organizational structure and where you are in that structure?
Answer - I deal with marketing people and infrequently with salespeople, with production, and with people in my functional area and in the field. I sort of think my desk is "live-wired" to the field. We have thirteen distribution centers all over the country, and I am their liaison. I make sure that their systems are straight and running and doing what they need to do. If there's a problem, they call me directly. I provide service to the people who run the field component. So, I deal with them most often.
The marketing people provide the forecasts, so my group takes the forecasts from marketing and implements them. One thing I do for marketing is to look at their raw materials in terms of packaging. Our system includes equations to determine the type of safety stock and packaging they will need. I also provide technical support, theoretically, to anyone in the company who needs it. In other capacities, people have asked me if we should open a new plant, and I am equipped to do an analysis of that, but right now my main thrust is in inventory.
