Management and control of inventory : the case study of a South African company

Abstract: Costs associated with backlog and significant inventories affect the company’s profit. An inventory is a crucial aspect in controlling and reducing supply chain costs and improving customer satisfaction. Predicting inventory is difficult due to the number of dependences which need to be satisfied like customer demand, production plans and procurement policies. This study aims to identify the causes of high inventory levels at case study company and suggest ways to manage and control inventory levels. The study used quantitative and qualitative methods to collect the evidence required to answer the research questions. Data were also collected from the questionnaire and document reviews. Tools, such as a cause and effect diagram, trend analysis and histograms, were employed to analyse data and causes of the inventory levels. Results indicate that deficient planning of sales, early purchases of materials, early delivering of materials, inventory inaccuracy, high work-in-process and deficient coordination, are causes for high inventory levels. Case study company management is recommended to align the three plans, namely: sales plan, purchase plan and inventory plan.M.Phil. (Engineering Management