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Problem

An increasing number of manufacturers are adopting more sophisticated purchasing practices and inventory control systems. What are the strategic implications of these developments for business marketers wishing to serve these customers?

Step-by-step solution

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Step 1/4

All the companies want to keep fewer inventories because a lot of resources are wasted in managing inventories. These resources can be invested in some other assets and can provide the company with valuable return of investment.

Step 2/4

Higher inventories might also force a company to arrange warehouses and incur other inventory management expenses. Higher inventory might also result in making the end product obsolete due to introduction of latest version of a product.

Step 3/4

Many companies are using various strategies to reduce the cost of inventory and manage the inventory levels in a better manner.

Following strategies are being used by various companies in order to reduce the inventory time and cost:

• Just in time strategy in which a company purchases the raw materials whenever it requires. Manufacturers make arrangement of such facility in which they can purchase raw material anytime when it is required in manufacturing.

• Reduction in lead time, wherein companies try to reduce the lead time in the manufacturing a product at the manufacturing facility.

• Customization of product includes arrangement of all the raw materials required in manufacturing a product at a place and based on the requirement the products are manufactured at the facilities.

Step 4/4

Thus, above given are some of the strategies that have been adopted by various companies in order to reduce the inventory cost and time.