Inventory Practices of Flour Milling Firms

The logistical function of inventory management has greatly changed greatly over the last few decades. Historically, inventories have been used to manage production and were considered a necessary component of doing business. However, with recent developments such as Just-In- Time (llT) and Electronic Data Interchange (EDI), this perception is changing. In addition, issues such as transportation modal choice, plant location, and transit characteristics impact inventory management. In this study, a set of four mail surveys were sent to flour milling firms in the United States to measure how firms were reacting to these trends and issues. Results indicated some confusion in the industry regarding EDI. There was strong agreement from respondents that EDI will continue to grow in importance but its benefits are not well understood. There also appeared to be differences in the industry regarding preferred supplier programs, with some firms indicating close relationships with all of their customers while other firms reported no close relationships with customers. In addition, there were some interesting comparisons between rail and truck transportation relating to inventory management. Transit characteristics were examined to look at rail and truck efficiencies. Finally, reported inventory carrying costs appeared to be extremely low in the industry. Accurately measuring carrying costs is important due to the large financial investment inventories represent.

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MPC Report

 Record created 2017-04-01, last modified 2017-04-24

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