For effective inventory use, the inventory records must accurately reflect the quantity of materials available. Inaccurate inventory records can result in lost sales (finished good not available at time of sale), disrupted operations (not enough of a component or raw material to complete a job), poor customer service (late deliveries to customers), lower productivity (additional setups to complete a job), poor material planning (the inventory records are critical in determining MRP quantities), and excessive expediting (trying to obtain necessary items in less than normal lead time).

LINKS TO PRACTICE Cisco Systems, Inc.


One exceptionally productive approach to inventory management is the automated inventory tracking system used by the very successful Cisco Systems—a world leader in providing networking solutions for all types of businesses. This tracking system forms an intricate network of suppliers, manufacturers, and customers and provides for real-time transactions. When a customer places an order via the Internet, suppliers can instantaneously see what parts are needed and can quickly respond by shipping the needed parts and then restocking. Such a system provides accurate, timely information, which helps both Cisco and suppliers to schedule, budget, and forecast. Since most of Cisco's orders are transacted over the Web, Cisco is able ...

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