EFFECT OF INVENTORY MANAGEMENT AS A KEY TO ORGANISATIONAL EFFECTIVENESS

          Inventories are vital to the successful functioning of manufacturing and service organization. They may consist of raw materials, work-in-progress, spare parts/consumables, and finished goods. It is not necessary that an organization has all these inventory classes. But, whatever way be the inventory items, they need efficient management as generally, a substantial share of its fund is invented in them. Different departments within the same organization adopt different attitudes towards inventory. This is mainly because the particular functions performed by a department influence the department’s motivation. For example, the sales department might desire large stock in reserve to meet virtually every demand that comes. The production department similarly would ask for stock of materials so that the production system runs uninterrupted. One the other hand, the finance department would always agree for a minimum investment in stock so that the funds could be used elsewhere for other better purposes.

          According to Temeng et al (2010:195), historically, however organizations have ignored the potential savings from proper inventory management, treating inventory as a necessary evil and not as an asset requiring management. As a result, many inventory systems are based on arbitrary rules. Unfortunately, it is not  unusual for some organizations to have more funds invested in inventory than necessary and still not be able to meet customers’ demands because of poor distribution of investment among inventory items. Based on the above analogy, therefore, this paper evaluates the inventory management and organizational effectiveness in manufacturing Organizations