Inventory Management and Aggregate Planning

Inventory Management and Aggregate Planning
Student’s Name
Institutional Affiliation
Inventory Management and Aggregate Planning
Organizations aim to achieve efficiency to enhance sustainability and profitability. As a
result, enterprise resource planning (ERP) systems are significant in linking all the core
processes of production. Primarily, manufacturing companies utilize the principles of aggregate
planning to determine the number of resources they require to sustain production from a few
weeks up to eighteen weeks (Monk & Wagner, 2012). Moreover, it is imperative to track the
inventory and stock to ensure efficient delivery of goods to retailers. Therefore, the adoption of
ERP software will improve the organizational practices applied in inventory management and
aggregate planning.
Firstly, in the manufacturing sector, Almarai, a dairy company in Saudi Arabia, will
benefit immensely from the adoption of ERP systems. Given that the corporation engages in
poultry, dairy, and bakery services, the software will collect the data from all these processes for
analysis (Almarai, 2017). Consequently, the managers have a basis to plan for future production
by allocating the resources to each department depending on the demand forecast. Hence, ERP
will eliminate inefficiency among the segments by maximizing the labor. Secondly, the
hospitality industry including the InterContinental Hotel will improve their inventory
management through ERP technology. Managers are required to maintain the stock of food and
beverages to meet the demand of customers at all instances and on time. Therefore, the ERP
system enhances the elimination of shortages and oversupply of commodities.
Cumulatively, ERP systems enables the organizations to save money by monitoring
production and service delivery; hence, eliminating wastage of labor and resources. However,
the company faces hidden costs. For instance, Almarai will incur extra expenditure in
harmonizing the ERP software between its large segments while the Intercontinental is faced
with switching costs among the different vendors. Nevertheless, ERP is integral in improving the
branch of inventory management and aggregate planning.
Almarai. (2017). Almarai Products. Almarai. Retrieved from
Monk, E., & Wagner, B. (2012). Concepts in enterprise resource planning(4th ed.). Boston, MA:
Cengage Learning.

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