Two Dimensional Decision Matrix and Kanban System for Inventory & Cost Management

Abstract

In this VUCA (volatility, uncertainty, complexity and ambiguity) world, it is very difficult to predict or forecast the sales and inventory for the product. Manufacturing industry developments heavily depends on the strength of the supply chain. Inventory management is very vital activity in supply chain management as it fulfils the customer demand and also, helps the organization to keep inventory cost low and manage inventory on time. However, many organization struggles to manage inventories which increases the overhead costs and inventory cost to the organization. JIT and Kanban are the techniques which helps organizations to keep inventory minimal and at the same time avoid stock outs problems. This methods helps the companies to manage accounts efficiently. This paper presents the study and implementation of JIT and Kanban technique with the help of ABC and XYZ analysis. This study is also an example for SMEs which reveals how 2 dimensional decision matrix can help to reduce the inventory cost, avoid stock outs and manage inventories efficiently.