Stock control in a Chemical Firm: Combined FSN and XYZ Analysis

Abstract

Inventories occupy the most strategic position in the structure of working capital of most business enterprises. It constitutes the largest component of current asset in most business enterprises. In the sphere of working capital, the efficient control of inventory has passed the most serious problem. The efficiency of inventory control affects the flexibility of the firm. Proper inventory control helps to make effective use of working capital by maintaining the right amount of stocks of materials, components etc thereby over stocking is avoided. Thus, the working capital will not be blocked in excess inventory.The Company's success lies on its timely completion, within specific budget and with required performance. In particular an efficient and effective inventory management helps a firm maintaining competitive advantage, even in an uncertain economy. Here, the chemical firm has no specific inventory materials management techniques that has lead to stock accumulation. The issue faced has caused profit loss, which companies cannot afford to lose if they want to stay competitive. This paper goes through the inventory management system of the chemical firm using combined FSN and XYZ analysis.