Inventory management and ABC analysis practices in competitive environments

Abstract

The inventory management practices of six major companies/institutions in various industries were compared with recommendations for improvement by using the ABC analysis inventory management method. The ABC analysis tool was found to be beneficial to most companies discussed in this paper, with several companies already utilising the basic principles behind the method, either manually or with the use of an enterprise resource planning (ERP) system. However, a number of technologies must be in place to make inventory management systems successful as data capture techniques are needed to pass inventory-based information to the ERP system. At the highest levels, ERP systems manage the data and ensure customer fulfilment and a detailed analysis describing how a global company improved inventory management metrics by incorporating ABC analysis was included.