Inventory management system of Bengal Polymer Wares Limited

Abstract

Bengal Polymer Wares Limited is one of the oldest plastic manufacturing organizations of Bangladesh. It is producing quality product and distributing them all over Bangladesh. To match their commitment towards the quality they have taken absolute trust as their branding. Like other manufacturing organization Bengal collect their several types of raw materials from different places of home and abroad. No wonder Inventory management has become one of their important and critical issues. To produce their products they need 130 to 150 raw materialsdirect or indirect. To gain control over inventory management they identify seven core activities to be performed and those are inventory receipts, inventory issue, finished goods received, finished goods dispatch, inventory cycle count and reconciliation, finished goods return, physical storage management. Though monitoring these they get fair amount of control over inventory management, they still have other issues to deal with. They purchase most of their raw material from abroad and so they need open L/c and do other formalities related to import. These and the distance of the supplier and other issues like lack of coordination and planning cause Bengal a lengthy lead time and it increases their cost and force them to have a higher safety stock. On the other hand as Bengal Polymer Wares are using a warehouse which is also used by other sister concern of Bengal Group. As a result they could not able to calculate their separate carrying cost for their inventory and it prevents them from calculating economic order quantity. On the other hand as they face criticality regarding the warehouse they could not able to treat warehouse expense as it should be. On the other hand they value finished goods inventory on selling price for the sake of simplicity. As a result they need to wait till the end of the accounting period to know the value of their actual inventory. However their internal control over inventory is very impressive as they use almost fully automated method to trace their inventory. Their practice regarding safety stock and reordering point is absolutely spot on. It would be more beneficiary for Bengal Polymer Wares if they could separately recognize their expense for ware house and allocate them properly. This will help them to calculate their economic order quantity. More coordination and importance on cash flow statement should be given so that Bengal can avoid any unusual losses regarding inventory import.