The influence of information technology in inventory management

Abstract

Inventory management simply means the supervision of the assets, which are non-capitalized and the other stock items. It is a component of the supply chain management that helps in the supervision of the flow of goods from the manufacturers to the stores or warehouses and to their points of sale. The information technology is said to have influenced inventory management using different tools. The paper has discussed various information technology tools as they have been applied in inventory management. The findings are based on secondary sources of information. This means that most of the information written is the combination of the ideas from the different scholars about my topic. The tools discussed by the paper are barcoding and scanner, enterprise resource planning, radio frequency identification, and decision support systems. Every, too, is explained in detail while giving the advantages it brings to the companies as long as inventory management is concerned.

Introduction

The modern society has been characterized by the advancement of technology that has changed the normal procedures of doing the tasks. Companies applying modern technology are considered to have a more competitive advantage than the ones which do not apply. In inventory management, information technology covers the hardware and software dimensions that help the companies in collecting, organizing, and analyzing the data hence facilitating the achievement of the goals and the objectives. Information technology employees help in computer networking, management of data, ensuring the companies’ security, development of the business software, and helping in updating the computer technology. Inventory management simply means the supervision of the assets, which are non-capitalized and the other stock items. It is a component of the supply chain management that helps in the supervision of the flow of goods from the manufacturers to the stores or warehouses and to their points of sale (Rahim et al., 2018). Like any other area of business management, inventory management has been influenced by information technology. Most of the inventory management processes use information technology techniques such as storing the soft data, designing reliable inventory control systems, analyzing the inventory processes, and also networking the inventory services. This paper carries out the research about the following information technology tools as they are applied in the inventory management and provides their brief report (Fitriana, Moengin & Riana, 2016). The electronic data internet technology, bar coding and scanner, enterprise resource planning, radio frequency identification, and decision support systems. The tools are said to have influenced inventory management hence enhancing the operations.

Objectives of the study

The paper has the following study objectives

• To analyze different information technology techniques as they are applied in inventory management.
• To analyze the advantages that the companies are applying the information technologies in their inventory control benefit.

Methodologies

The paper uses secondary sources of information such as the peer-reviewed journals, books, and the websites which relate to the inventory management relative to the information technology. Reading the different sources allowed me to come up with the idea of what inventory management entails, the information technology tools used, and how they are important to the companies.

Findings and Discussions

How Information Technology tools affect Inventory management

Internet technology on Electronic data

This kind of information technology is highly applied by inventory management, especially when they have the transactions and information exchange as part of the effective ways of running their business. This tool gives accurate and efficient sales information about the clients within a short time. The tool is also used in sending the invoices, lading of bills, and the confirmations of the dispatch (Fitriana, Moengin & Riana, 2016). The main advantage of this information technology tool in relation to inventory management is that it only accepts the important information about the transaction, which is accepted by the systems. This helps in speeding the transactions, as well as reducing the costs and the rate of the errors (Rahim et al., 2018). It also helps the companies have good services to the customers, quick processes of operations, increased production, and reduced paper technology hence increasing the accuracy of the information. The tool has played a big role in the inventory management of the companies by switching from the traditional ways of recording information about the transactions (Muyumba & Phiri, 2017). It has made the services fast since most of its operations are computerized. Several manufacturing companies in the United States of America are already using electronic data internet technology to carry out their inventory and supply chain operations. This tool has also helped in the expansion of the manufacturing industry since the areas of management which seemed to be difficult have already been settled by the information technology.

Scanner and Bar Coding

The other tool that the paper discusses is about the bar coding and scanner technique. This information technology tool simply means the application of the codes in machines for easy detection of the inventories coming in and out of the companies (Rahim et al., 2018). In this case, all the goods are given their identification codes, which are connected to the systems in such a way that you only feed the code to the system to detect anything required for the products. The bar codes make it simple for companies to track their goods in all the chain processes (Wibisono et al., 2016). In this case, the bar codes are able to specify the products’ names and their manufacturer. The technology makes it easy to track the goods when they are released by the company and before they reach the final consumer or the retailer. Companies using this information technology tool are finding it easy to manage goods, especially when they give them to third parties for transportation services. As the electronic data internet technology in the inventory management, bar coding and scanner helps the companies in saving the time that could have been used in the paperwork when tracking the goods when receiving or delivering them to their specific clients. It also helps in the investigation of the goods hence ensuring that only quality products are received or delivered to the customers. Bar coding and scanner technology have played a wide role in minimizing the total cost, increased efficiency of the companies, maximization of the profits, and also improving the accuracy of the information related to the goods delivered or received. It can, therefore, be said that technology has made inventory management easy and transparent.

Enterprise resource planning

This tool of information technology is considered to be the integration of the different systems used in automating all the business functions. This technology is said to require the synchronization of the operating system, hardware, and any other component of telecommunication. When those systems are structured together, they combine the different features which help in keeping the privacy of the companies. In this case, the information related to the goods which the companies are operating with is kept safe and cannot easily leak to unauthorized people (Fernando, 2017). In addition to that, the enterprise resource planning technique helps in planning, organizing, and controlling all the business activities without the physical presence. It means that this information technology technique in inventory management has made it easy for the managers to control all the activities. Like the other technologies, enterprise resource planning has helped the inventory management in cutting the costs, increased efficiency, enhanced data privacy, easy trucking of the goods, controlling the employees without being involved directly, easy planning for the company, and also the general activities in the company are accelerated as long as the inventory management is concerned. Studies show that the companies applying the enterprise resource planning tool do not face the problems of managing their goods and also the employees. The implementation of this technology may seem to be costly in the short run, but in the long run, it pays back at a high rate.

Identification of Radio Frequency

This information technology has similar features to the bar code. The only difference is that this one can uniquely identify the products, for instance, their production and expiry dates. The data is transferred through a portable device commonly known as a tag. Tag is said to have almost everything about the products being operated with. The common features about the product that tag possesses include the manufacturing date, color, and location, among other important features. The radio frequency technology has helped many companies easily track their products and ensure that the quality goods reach their customers. Inventory managers use this technique when confirming to their customers about the quality of the goods they are selling. The technology also helps in accessing the products, for instance, the information about the manufacturing date helps the inventory management team to decide on which products to be sold before the others. The main advantage of this information technology is that it has unique features that can access the quality of the products received and delivered to the customers. It ensures that the quality within the companies is always high, and the customers have full information about the products, even the least they expected. The companies using this technology in their inventory management are considered to have more competitive power than the ones which do not use the technology. It can, therefore, be said that the radio frequency identification technology has influenced the inventory management positively and hence reducing the cost of management, increased efficiency, enhanced quality, saves time in investigating the products received and delivered, and easily read the unique features of the products among other advantages.

Decision Support Systems

Unlike in the traditional ways of decision making, modern technology has come up with inventions that help in decision-making activities. Under this tool, the design makers comply with any information that is useful from the resource documents, models of the business, or even the raw data that helps in solving the problems and also making the decisions. Some of the information that is handled by the system includes information about the current assets, sales figures in the consecutive weeks, and the projected figure of sales based on past information (Dhodi, 2018). This tool helps the inventory managers in deciding what product to deliver produce high and which not to produce high. This information technology tool has helped the companies in taking the correct decisions of the inventories they should be operating with based on past information.

Conclusion and Recommendations

Information technology plays a wide role in modern businesses. Many manual activities which were applied in the past have been replaced by the technological ones. Inventory management, as part of the management, has adopted the modern information technology techniques to help improve its services. The information technology tools which are commonly used as they have been discussed by the paper include barcoding and scanner, enterprise resource planning, radio frequency identification, and decision support systems. The tools have advantages such as increased production, data privacy, increased quality of the services and the products, time management, and hence maximizing the total profit of the companies. It is clear that the companies which have adopted the information technology techniques have registered the positive results. From the study, there are some recommendations which need to be taken care of as long as the information technology is used. First, the companies should ensure that they keep updating their technology for them to remain relevant in the fast-moving technology. The companies should also keep on checking those tools because they are human-made hence subject to errors. Finally, there should be specialized personnel who should be dealing with those tools to ensure that they remain reliable all the time, and the information they provide is accurate.

References

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Wibisono, R. S., Sofianti, T. D., & Awibowo, S. (2016). Development of a web-based information system for material inventory control: The case of an automotive company. CommIT (Communication and Information Technology) Journal, 10(2), 71-83.

Fernando, M. P. M. C. (2017). WEB-BASED INVENTORY CONTROL & ORDER PROCESSING SYSTEM FOR JC ENTERPRISE (Doctoral dissertation, University of Colombo).

Muyumba, T., & Phiri, J. (2017). A Web-based Inventory Control System using Cloud Architecture and Barcode Technology for Zambia Air Force. International Journal of Advanced Computer Science and Applications, 8(11), 132-142.

Dhodi, M. H. (2018). The effect of information technology on inventory management for the manufacturing companies in Mogadishu. Eur J Logist Purch Supply Chain Manage, 3, 20-29.

Fitriana, R., Moengin, P., & Riana, M. (2016, February). Information system design of inventory control spare parts maintenance (valuation class 5000)(case study: plant kW). In IOP Conference Series: Materials Science and Engineering (Vol. 114, No. 1, p. 012076). IOP Publishing.