NEED FOR AN INTEGRATED APPROACH Needed due to the importance of the Inventory Management function. These include Materials Planning Purchasing Receiving Stores Inventory Control Scrap Surplus Disposal

NEED FOR AN INTEGRATED APPROACH If some of the functions were to be separately handled, a conflict of interests occurs. Purchase department, if allowed to operate independently, may take decisions which result in sub- optimisation.

Example 1 Under a separate set-up, the purchase department may treat discount as a very important factor Buy large quantities to avail of the discount –without taking into account its impact on the warehousing and carrying costs.

NEED FOR AN INTEGRATED APPROACH Hence, the need to balance the conflicting objectives –To achieve the organisational objectives and goals

Example 2 An expansion of activities in an organisation, will require –planning for the increased requirements –developing new sources –revision in inventory levels This will entail increased load in receipt of materials, inspection and storing.

Example 2 In an integrated set-up, the materials manager, with responsibility for all such inter-related functions –Exercises control –Co-ordinates with all other functional managers To ensure proper balance of the conflicting objectives of the individual functions.

Summary Integration helps in the crucial and rapid transfer of data –through effective and informal communication channels Integration ensures that message channels are shortened Integration ensures that various functions identify themselves to common goals and pursuits It facilitates greater coordination and better control