CILTSC03 – Inventory Valuation and Replenishment – Transport Forum

Inventory equals money. The more inventory we hold, the more it costs the business. In this lesson we expand on what these inventory costs are and how we can attempt to reduce them.

This lesson explains how to measure inventory value and why. It goes on to provide an explanation and examples of 5 different valuation methods that may be adopted by businesses that carry inventory. The decisions made in this are help define the effect of inventory value on the financial accounts.

It is important for staff to know about financial reports. All warehouse staff have a direct impact on inventory and therefore has an impact on the financial statements of the business. Knowing about these financial reports and the effect inventory management has on them will make staff more responsible in their line of work.

The key decision of “how much” and “when” to order is dependent on the inventory replenishment rules selected in the Inventory Master Record. There are also other factors such as our policies and strategies, as well as stability of demand which all provide input this critical calculation.

Purchasing and procurement are integral functions within the supply chain. In this lesson, we look at an introduction to the function of purchasing and the impact that this function has on the greater supply chain.

Procurement and purchasing involve themselves in sourcing suppliers and building relationships and even partnerships with these suppliers. These suppliers and partners are an integral part of the supply chain of a company.

An important part of purchasing and procurement is that of purchase contracts and negotiations – to agree on those contracts and put them in place. In this lesson we will briefly discuss purchase contracts and go into detail on how to negotiate effectively

Each business will define an organisational code of ethics which define how the business conducts itself and what is expected of its employees. Philosophical approaches to professional and ethical behaviour are analysed against own beliefs to determine an appropriate framework of behaviour and practice.