Inventory management is on a lot of people’s minds right now. That includes transit authorities, according to the Metro Magazine article “Outsourcing Inventory Management Yields Savings.”
Author Claire Atkinson begins the article by saying, “As economic conditions have put increasing pressure on transit agencies in recent years, some are looking to their parts and inventory systems to be streamlined or even outsourced.”
The article brings up several good points about inventory management. For instance, is it better to buy a large quantity of spare parts to get a discount or is it better to buy smaller quantities as the need arises?
In the former case, it will cost more to store the parts, and they have a greater risk of becoming obsolete before they are even needed. In the latter case, it can cost more to order small quantities and have to pay for the separate transport of them all.
Which is the better option?
A good solution, according to the article, is to shift inventory management to vendors and other parts suppliers.
“Because a parts vendor has access to alternate sources or has better leverage on suppliers … overall material costs are lower for the end user. Also, parts vendors are more experienced with planning inventory and can reduce out-of-stock situations, therefore improving bus availability.”
However, if a company has inventory tracking software it can usually solve these problems on its own without too much trouble. Inventory management software helps companies have the optimal amount of inventory on hand so that they can meet customer demand without breaking the bank.
Managers can automatically reorder key parts and products when they reach a certain level or when they approach a time of year when they historically experience increased demand.
What do you think is better? Should companies let their suppliers handle inventory management or should companies use business inventory management software to handle it themselves?
Kudos to Metro Magazine for its thought-provoking article. The photo of the disassembled buses is from Flickr, and it is the copyright of CavinB.