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Three Principles of Healthy Inventory Management  

   
2019-03-31 
An understanding of the three basic business processesĀ¹ will help any business person, inexperienced or experienced, to create a more successful and functional business. This essay will highlight the steps that businesses will take to bring a product from a raw material to a finished product ready to be sold. While there are three main business processes, there are smaller steps that fall under each of the larger processes. We will now take a look at the steps taken by a company to create a product.

1. Procurement Process

In this stage the company will attain the material necessary to create the company's necessary goods or services.

a) Raw Materials - These are simple and basic materials the company attains to assemble goods or services. These raw materials will likely sit in storage until it comes time for the production process to begin.

2. Production Process

In this stage the company will produce and prepare the goods or services for sale.

a) Subassembly - In this stage the company will compile raw materials and form them into a larger unit in preparation for the final assembly process. 

b) Assembly - Putting together the units from the subassembly in order to create an item capable of performing a specific function. It is also important to note that after this stage the item should be able to be disassembled and reassembled without the item being destroyed. 

c) Packaging - At this point the product or service is ready to be packaged for sale. The packaging is likely to vary depending on the size of the item, the intended use of the item and the desired market that the product is intended to be for. For example if the item is likely to sit in a store, then the item will be packaged in such a way that it is able to be presented for sale.

d) Finished Good - Products which have finished the manufacturing process and are now ready to be either placed into inventory or shipped to the items desired locations. The final good is often what is seen daily inside of stores ready for purchase. It will require no further assembly and is ready for the consumer.

3. Fulfillment Process

In this final stage the company has done all of the desired production and packaging to the good or service. This item is now ready to leave the company'ss area of production.

a) Distribution - The final good or service are now ready to be distributed. This will likely involve shipping the items to stores prepared for sale to consumers. However, if the items are waiting for purchase they may be distributed to warehouses for storage.

b) Sale - This is the clear final stage. Once the item has been sold it is likely that the producing company will not have any more contact with the item. This can change if the item has a warranty and the item fails, or if there is a recall on the item.

This article has presented the basic business processes while taking a look at some of the more in depth stages that the processes consist of. It is important to note that there are many steps that were not included in this summary. 

For example, this summary did not go into any of the marketing, accounting and engineering that go into the business processes. Instead, the article focused on the processes that take a raw material to a finished good. The goal of this article was to provide the reader with a better understanding of business. 

By: Will Higgins 

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