EDUCATION 101: Inventory Management




The traditional approach to efficient inventory management seeks to balance between a large inventory, capable of continuously providing needs and a small inventory, keeping inventory as low as possible. In contrast, contemporary management philosophy holds that efficient management of supply pipeline may obviate the need for inventories altogether.

It should be understood that efficient inventory management in Kenya, would operate somewhere between these two extremes that’s some inventory eliminate the supply risks peculiar to Kenyan supply market while at the same time implementing MRTI, JIT and lean supply concepts in an endeavor to be more competitive.



Apart from availability problems and the fact that continuous supply of inventory cannot be guaranteed with absolute certainty, additional reasons include;

  • Delivery cannot be exactly matched with usage day by day.
  • Economies associated with buying or manufacturing in large quantities more than offset the cost of storage.
  • Operational risks require the holding of stock to guard against breakdown or programmed changes
  • For work in progress where completely balanced production flows is impracticable.
  • For finished products where the holding of a butter stock between production and customer is desirable
  • Owing fluctuations in the price of a commodity it is desirable to acquire stocks when prices are low.
  • In order that material may appreciate in value through storage such as timber, wines and spirits
  • In order that customers may be attracted by a range of products from which to select.

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