Marketing, Purchasing and Inventory Control

How do we communicate? Depending on the size of the organization and various other factors, full control and management of inventory may not be the responsibility of purchasing.

Marketing seems to be taking the lead in distribution companies in deciding what materials to sell and who to buy them from. Purchasing receives instructions to get the product on the shelf. The inventory control people step in if the product does not move and it becomes a purchasing problem.
 

It has finally hit home in some organizations that we might need to get rid of the old product before we bring in the new product. Once a new product has been launched, it is hard to get rid of the old. Salespeople convert their customers to the new line, possibly because sales get incentive for pushing the new line, and then again the old line is going away. Salesmen push what we have and what we will keep in stock.

Standardization should be considered by marketing. Five tool suppliers with five standard screwdrivers increases inventory. It is true, that some customers insist on a certain brand of screwdriver. This is an area that continually needs reviewing.

Communication between purchasing and marketing should be continual. Phasing out product lines tells us not to buy. Possible changes alert us to lower inventory levels. Promotional materials and new catalogs should be given to procurement, not after they are out in the customer’s hands. Not all catalog items can be stocked, however give purchasing a chance to have the top 25% fast movers on hand. To promote an item and have none in stock reflects very badly on purchasing, the salesman, and the company.

Being in purchasing, I look at inventory control as being employees that are computer experts. They can move inventories, shut down sites, create excess inventory reports, turn rate reports and never leave their desks. They can furnish the buyers all kinds of reports on how to reduce inventory and etc., however unless the buyer has the time to work the reports, companies are losing the benefits of inventory control. 

In the old days, reports were generated automatically on a printer in the mail room. It took a person a half day to sort and distribute. Finally they took a poll of actually how many reports were used and how many were trashed. It was surprising how few reports were actually looked at. Information is great, but it is only information. What you do with it makes the difference.