ABSTRACT
This paper assessed the relationship between material management operations and deemed optimal inventory level of a beverage manufacturing company. The researcher believes that the study can provide a solution to operating on-hand inventory which can drive further improvements through optimizing material management operations and required carrying inventory.
The study used the descriptive-correlational quantitative research design. The researcher of the study used stratified random sampling from clustered departments, 9 planners, 114 warehouse personnel, and 14 purchasers, and administered the distribution of validated questionnaires. An extensive survey was held to assess the demographic details and ask operational questions about inventory management activities and related methodology in terms of stock management and inventory movement. The acquired data were used to assess material management practices and their corresponding inventory level.
Findings revealed that despite the differences in assessment of the respondents, the statistical analysis of the results showed that the extent of material management operations as assessed by three groups of respondents was all highly observed. The assessment of the optimal inventory level of the material management has resulted in a very satisfactory level. Moreover, the correlation analyses concluded that material management operations are significantly related to the optimal inventory level at a beverage manufacturing company.
KEYWORDS : Material Management Operation, Optimal Inventory Level
INTRODUCTION
Manufacturing companies tend to carry inventory as a typical setup. Carrying inventory helps ensure supply availability and continuity of operation, making companies aim to manage inventory effectively. A method of managing inventories is through material management. Material management and inventory control systems are intended to oversee workable inventory supply and replenishment plans. This shelters order placing, receiving transactions, storage management, and material movement up to issuance to production. These are the processes crucial to prevent interruption in the flow of supplies. Ivanov (2019) stated that “the role of inventory management is to strike a balance between inventory investment and customer service”. The maintaining supply level may shelter not just the fluctuations due to external factors but it should consider internal transactions as well.
In contemporary market competition, materials management needs to continually check in different perspectives, consistently observe if it is efficient and productive, finding where the waste exists, and taking necessary actions to eliminate them. Initiatives for self-improvement drive many companies to adopt either Japanese inventory management principles or its US counterpart popularly known as World Class Manufacturing. Both concepts evaluate the period when to bring in materials and dispatch them to customers. Businesses claim that these actions show drastic improvements in reducing investments sitting in the warehouse.
The main function of inventory is to ensure the sustainability of supply. It can be done by buffering stocks and replenishing consumed materials. Bhandari (2017) cited “Inventory management deals with the eternal issue of how much to keep on hand as well as how much and how frequently to order. All organizations have to operate in a dynamic environment. There exists uncertainty in demand and lead-time. As a result, the organization needs inventory management.” Generally, around fifty to seventy percent (50%~70%) of organizational assets come from raw and packaging materials. Perhaps, the single largest investment made by a typical company. The rest comes from fixed assets and labor.
Hongren, Dater, and Rajan (2015) described that Inventory Management includes planning, coordinating, and controlling activities related to the flow of inventory into, through, and out of an organization. This simply means that a readily available material at the right time and place increases the assurance level of continuous supply to both internal and external customers.
Inventories signify enormous amounts of money sitting in the warehouse. A huge sum of capital is invested in raw and packaging materials. Nonetheless, management sometimes disregards warehouse operations as it is classified as non-value adding and not an income-generating operation. However, in reality, keeping buffer stocks has several advantages as well. It allows companies to immediately fill customer demand, avoid supply shortages, accommodate delivery delays, smoothen production flow, reduce peak period capacity needs, and possibly take advantage of economies of scale. For that reason, it is very important to keep track and manage maintenance and monitoring of stocked items, whether those items are company assets, supplied materials, or finished products.
The purpose of the study was to assess the influence of material management operations on maintaining the inventory of a beverage manufacturing company together with its corresponding subsidiaries. This study was significant in adapting means of maintaining optimum inventories. This served as a basis to uncover specific problems concerning material management and inventory concept approaches applicable to any beverage manufacturing enterprise.
MATERIALS AND METHODS
This study used the quantitative design of research. It employed a combination of descriptive and correlational methods. It involves the utilization and analysis of numerical data using specific statistical techniques.
This research described specific behaviors of the respondents like how the materials management group carried out their operations. Meanwhile, the correlational method was also deemed necessary to determine if there is a relationship between material management operation and the optimal level of carrying materials of a beverage manufacturing company.
The research instrument used in this study is a survey questionnaire. A series of questions related to the study were disseminated and the responses were aggregated to conclude. The questionnaire used in this study has two parts. The first portion focuses on the demographic details of respondents. The second portion identifies the assessment of the material management people of the beverage company regarding material management operations, optimal supply level, and carrying inventories.
To establish validity and reliability of the research instrument and to ensure that occurrence of error was minimized, the Delphi method and Cronbach analysis were executed to the survey questionnaire. Afterward, a survey was held on a similar profile of target respondents and conducted a pilot test.
The study was conducted in a Beverage Manufacturing Company. It covered the primarily affected departments which consist of employees from planning, purchasing, and materials warehousing representing material management. The respondents were the key personnel-consisted of 9 planners, 14 purchasers, and 118 warehouse personnel who specifically conduct material management activities. Validated modified survey questionnaires were used for gathering data.
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