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In today’s tight economic environment, power is shifting more towards the customer. Margins are compressing and organizations are being forced to change the way they conduct business. Companies need to optimize the sourcing and procurement of goods and services based on consumer demand. They must maintain supplier interactions and reduce supply chain risk to improve order performance and maintain value. Minor disruptions in the supply chain can have a significant impact further down the line, including failure to deliver a customer’s order. Supply chain visibility is required to maintain control over events as they occur and to ensure that companies have end-to-end control over the life cycle of an order.This is no more apparent than in inventory management. Inventories are a large current asset of an organization. Proper inventory valuation is necessary to assign a monetary value to the items that make up the inventory so as to ensure accurate financial records. If inventories are not correctly measured, then expenses and revenues can’t be matched correctly. These financial controls must be applied not only forward through the chain but in reverse as well. Company asset recovery procedures should identify items that are out of date, seasonal, defective or in need of repair. As these items travel back though the system, proper inventory valuation guidelines still apply. Whether these items are to be liquidated or refurbished and returned into the system, the goal of both large and small organizations should be to maximize the greatest possible return from these assets.
The main goal of supply chain visibility should be to strengthen the system by making information readily accessible to all key participants within the chain, including the customer. Supply chain visibility technology can promote quicker responses to events allowing users to take immediate action to change demand or redirect supply. Improved supply chain capabilities provide companies with a significant return on investment as well as improvements in both forward and reverse logistics operations.
In light of today’s intricate and constrained supply chains, the only way for organizations to maintain perfect inventory valuation is by exerting control over supply chain events as they happen.