Chapter 2

1. RELATED LITERATURE

1.1 Foreign Related Literature

Sales & Inventory Monitoring Systems

by Audra Bianca, Demand Media

Data Collection for Decision-Making

Using this type of system, a company makes strategic business decisions regarding raw material purchases, production scheduling, pricing, logistics and other decisions in the supply chain. Sales and inventory data enables the company to increase or decrease production in the factory so the company won't have too many finished goods stored in its warehouses.

Function

A sales and inventory monitoring system collects data to aid in production scheduling. For example, some systems use recent sales data to forecast how many of a type of product will be needed to meet consumer demand in the near future. This includes monitoring the levels of a product at all locations. A good example is a global company with customers all over the world. The customer may live in Japan, but the system must see if the warehouse in Canada has a product available to ship to Japan.

How it Works

The system compares current inventory levels of a product and the number scheduled for production with the number needed, and determines if the level of production must be changed. If necessary, the system sends a message to the master production schedule to increase production. Also, the inventory monitoring system slows down production when a product's retail sales levels don't meet the sales forecast and the company overproduces the product.

Competitive Advantage

Automated sales and inventory monitoring gives a company a competitive advantage by linking different automated processes within the supply chain. For example, automating the ordering process for customers and the production scheduling, then adjusting manufacturing based on up-to-date inventory levels, makes a company more flexible, capable of deciding how to best satisfy customer orders. When automated activities are...