SAQA All qualifications and part qualifications registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.
SOUTH AFRICAN QUALIFICATIONS AUTHORITY 
REGISTERED UNIT STANDARD: 

Discuss the role of inventory in a manufacturing environment 
SAQA US ID UNIT STANDARD TITLE
377364  Discuss the role of inventory in a manufacturing environment 
ORIGINATOR
SGB Manufacturing and Assembly Processes 
PRIMARY OR DELEGATED QUALITY ASSURANCE FUNCTIONARY
-  
FIELD SUBFIELD
Field 06 - Manufacturing, Engineering and Technology Manufacturing and Assembly 
ABET BAND UNIT STANDARD TYPE PRE-2009 NQF LEVEL NQF LEVEL CREDITS
Undefined  Regular  Level 4  NQF Level 03  10 
REGISTRATION STATUS REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER
Reregistered  2018-07-01  2023-06-30  SAQA 06120/18 
LAST DATE FOR ENROLMENT LAST DATE FOR ACHIEVEMENT
2024-06-30   2027-06-30  

In all of the tables in this document, both the pre-2009 NQF Level and the NQF Level is shown. In the text (purpose statements, qualification rules, etc), any references to NQF Levels are to the pre-2009 levels unless specifically stated otherwise.  

This unit standard does not replace any other unit standard and is not replaced by any other unit standard. 

PURPOSE OF THE UNIT STANDARD 
This unit standard is required by people working in the manufacturing environment who need to understand the importance of inventory in a manufacturing environment; distribution management and required functions; the importance to relate inventory to customer service.

Learners credited with this unit standard are able to:
  • Discuss the concept of an inventory.
  • Explain and perform ABC analysis of inventory.
  • Explain purchasing and manufacturing lead time.
  • Calculate relevant inventory costs.
  • Compare order quantity costs.
  • Explain the concept of safety stock.
  • Explain distribution management and required functions.
  • Relate inventory to customer service.
  • Discuss factors that determine the location of a facility.
  • Explain Distribution Requirements Planning (DRP).
  • Discuss a number of distribution ordering models using given examples.
  • Discuss the importance of customer service. 

  • LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING 
    The credit calculation is based on the assumption that learners are already competent in terms of the following outcomes or areas of learning when starting to learn towards this unit standard:
  • Mathematics at NQF Level 2.
  • Language skills at NQF Level 2. 

  • UNIT STANDARD RANGE 
    Specific range statements are provided in the body of the unit standard where they apply to particular outcomes or assessments. 

    Specific Outcomes and Assessment Criteria: 

    SPECIFIC OUTCOME 1 
    Discuss the concept of an inventory. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The concept of inventory is defined in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    The term 'buffer supply' is explained according to procedures. 

    ASSESSMENT CRITERION 3 
    The need to hold inventory is explained in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 4 
    Arguments against inventory are critically analysed in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 5 
    Types of inventory are listed and discussed in line with Operations Management Body of Knowledge (OMBOK). 
    ASSESSMENT CRITERION RANGE 
    Consider the following types: raw materials; work-in-process; semi-finished assemblies (component stock); finished products; distribution inventories; maintenance, repair and operation supplies.
     

    ASSESSMENT CRITERION 6 
    A materials flow diagram is presented in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 7 
    Functions of inventories are described according to procedures. 

    ASSESSMENT CRITERION 8 
    The role of inventory and its impact on customer service is described in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 9 
    The Key Performance Indicators (KPIs) measuring and monitoring inventory performance are described according to procedures. 

    SPECIFIC OUTCOME 2 
    Explain and perform ABC analysis of inventory. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The ABC classification of inventory is discussed in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    The ABC analysis is performed according to procedures using examples. 

    ASSESSMENT CRITERION 3 
    The uses of ABC classification are described according to procedures. 
    ASSESSMENT CRITERION RANGE 
    Uses include but are not limited to cycle counting frequency, procurement priorities, replenishment systems and security.
     

    ASSESSMENT CRITERION 4 
    ABC calculations are performed according to procedures using examples. 

    SPECIFIC OUTCOME 3 
    Explain purchasing and manufacturing lead time. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The concept of lead time is defined in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    The influence of lead time on ordering is described according to operations procedures. 

    ASSESSMENT CRITERION 3 
    Re-order point is calculated according to procedures. 

    ASSESSMENT CRITERION 4 
    The effect of lead time on holding stock is explained according to operations procedures. 

    ASSESSMENT CRITERION 5 
    Purchasing lead-time is explained according to operations procedures. 

    ASSESSMENT CRITERION 6 
    Manufacturing lead-time is explained according to operations procedures. 

    SPECIFIC OUTCOME 4 
    Calculate relevant inventory costs. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    Factors influencing how often to order inventories are explained according to operations procedures. 
    ASSESSMENT CRITERION RANGE 
    Factors include but are not limited to cost of ordering, cost of carrying, shelf life, obsolescence, item value and quantity sold.
     

    ASSESSMENT CRITERION 2 
    Ordering costs are calculated according to operations procedures. 

    ASSESSMENT CRITERION 3 
    Carrying costs is determined according to operations procedures. 

    ASSESSMENT CRITERION 4 
    Total cost is determined according to operations procedures. 

    SPECIFIC OUTCOME 5 
    Compare order quantity costs. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The concept of Economic Order Quantity (EOQ) is defined in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    The ordering, carrying and total costs are compared according to operations procedures using a table. 

    ASSESSMENT CRITERION 3 
    The number of orders required for least total cost is determined according to operations procedures. 

    ASSESSMENT CRITERION 4 
    The EOQ cost comparison curve is presented and explained according to operations procedures. 

    SPECIFIC OUTCOME 6 
    Explain the concept of safety stock. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The concept of safety stock is defined in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    Back-order costs are explained according to operations procedures. 

    ASSESSMENT CRITERION 3 
    The notion of lost sales is explained according to operations procedures. 

    ASSESSMENT CRITERION 4 
    The effect of dissatisfied or lost customers is discussed according to operations procedures. 

    ASSESSMENT CRITERION 5 
    The effect of low running and overstocking is discussed according to operations procedures. 

    ASSESSMENT CRITERION 6 
    The effect of order quantities and stockout possibilities are discussed using a diagram. 

    ASSESSMENT CRITERION 7 
    The need to manage inventory levels in the supply chain is explained according to procedures. 

    SPECIFIC OUTCOME 7 
    Explain distribution management. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The elements and objectives of distribution management are described in line with Operations Management Body of Knowledge (OMBOK). 
    ASSESSMENT CRITERION RANGE 
    The distribution network comprises of: storage and inventory control; order processing; distribution planning; order picking; and shipping.
     

    ASSESSMENT CRITERION 2 
    The importance of the role inventory plays in the supply chain process is explained using examples of uncertainty. 

    ASSESSMENT CRITERION 3 
    The activities of a physical distribution system are discussed according to procedures. 
    ASSESSMENT CRITERION RANGE 
    Six interrelated activities are:
  • Transportation; distribution inventory; warehousing; materials handling; protective packaging; and order processing.
     

  • ASSESSMENT CRITERION 4 
    The factors to be taken into account when determining the location for a distribution centre are described using given examples. 

    ASSESSMENT CRITERION 5 
    The concept of vertical integration in the supply chain is outlined using examples. 

    SPECIFIC OUTCOME 8 
    Describe carriers operations. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    Various modes of transport for moving products from one geographical location to another are critically discussed using given examples. 
    ASSESSMENT CRITERION RANGE 
    Modes of transport are: road; rail; air; and water.
     

    ASSESSMENT CRITERION 2 
    Freight management is described using carrier categories as examples. 
    ASSESSMENT CRITERION RANGE 
    Carrier categories are: for hire carriers; not for hire carriers.
     

    ASSESSMENT CRITERION 3 
    The cost elements in a transportation system are described using given examples. 
    ASSESSMENT CRITERION RANGE 
    Costs: fixed costs; and variable costs.
     

    ASSESSMENT CRITERION 4 
    The cost of shipping full truck loads and less-than truck loads over a given route is compared using given examples. 

    ASSESSMENT CRITERION 5 
    The role of containerisation in the logistics channel is explained in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 6 
    Various types of containers are compared using examples. 
    ASSESSMENT CRITERION RANGE 
    Types of containers to be considered are: dry vans; open tops; flat racks; high cubes and specials.
     

    SPECIFIC OUTCOME 9 
    Discuss factors that determine the location of a facility. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The difference between physical and cost factors, related to the physical location decision and is analysed using given data. 

    ASSESSMENT CRITERION 2 
    A number of different channel types and structures for moving finished goods through the logistics channels are described using given examples. 

    ASSESSMENT CRITERION 3 
    Factors affecting the location decision are discussed in line with requirements. 
    ASSESSMENT CRITERION RANGE 
    Location includes country location, region/community location.
     

    ASSESSMENT CRITERION 4 
    Factors affecting the final choice of a site as a location for a distribution centre or other facility are described in line with procedures. 

    SPECIFIC OUTCOME 10 
    Explain Distribution Requirements Planning (DRP). 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The role of distribution requirements planning in the supply chain is discussed using given examples. 

    ASSESSMENT CRITERION 2 
    Material requirements planning is compared to distribution requirements planning in terms of their similarities and differences. 

    ASSESSMENT CRITERION 3 
    The prerequisites for a distribution requirements system are explained according to procedures. 

    ASSESSMENT CRITERION 4 
    A centralised distribution centre and a decentralised distribution centre are compared in terms of their advantages and disadvantages. 

    ASSESSMENT CRITERION 5 
    The interface of DRP with other logistics system modules is described according to procedures using a diagram. 

    ASSESSMENT CRITERION 6 
    The differences between the services offered by a third-party logistics provider and a fourth-party logistics provider are analysed according to their uses. 

    SPECIFIC OUTCOME 11 
    Discuss a number of distribution ordering models using given examples. 
    OUTCOME RANGE 
    Alternative distribution models are: the base stock system; order point system; periodic review system and double order point system. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The differences between various distribution replenishment systems are explained according to their uses. 

    ASSESSMENT CRITERION 2 
    The planned order release dates are determined using different models. 
    ASSESSMENT CRITERION RANGE 
    Models include the reorder point model, the periodic review model and the double-reorder point model.
     

    ASSESSMENT CRITERION 3 
    The process of collecting demands from outlying depots back onto a central warehouse point is explained according to procedures. 

    ASSESSMENT CRITERION 4 
    Basic DRP calculation is performed using given data. 

    SPECIFIC OUTCOME 12 
    Discuss the importance of customer service. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    The needs of internal and external customers are analysed in line with Operations Management Body of Knowledge (OMBOK). 

    ASSESSMENT CRITERION 2 
    The importance of maintaining customer service is explained in line with Operations Management Body of Knowledge(OMBOK). 

    ASSESSMENT CRITERION 3 
    A number of quantitative measures of customer service are demonstrated according to procedures. 
    ASSESSMENT CRITERION RANGE 
    Quantitative measures are: percentage type measures; and absolute measures.
     

    ASSESSMENT CRITERION 4 
    Customer service levels of a selected company are investigated and findings reported. 

    ASSESSMENT CRITERION 5 
    A number of techniques a company can employ to keep customers happy are discussed in line with company procedures. 

    ASSESSMENT CRITERION 6 
    The effect of poor customer service on business survival is discussed using raw data. 


    UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS 
  • Anyone assessing a learner against this unit standard must be registered as an assessor with the relevant ETQA.
  • Any institution offering learning that will enable achievement of this unit standard must be accredited as a provider through the relevant ETQA.
  • Moderation of assessment will be overseen by the relevant ETQA according to the moderation guidelines and the agreed ETQA procedures. 

  • UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE 
  • Concept of an inventory.
  • ABC analysis of inventory.
  • Purchasing and manufacturing lead time.
  • Inventory costs.
  • Order quantity costs.
  • Concept of safety stock.
  • Distribution management and required functions.
  • Inventory to customer service.
  • Factors that determine the location of a facility.
  • Distribution requirements planning (DRP).
  • Distribution ordering models using given examples.
  • Discuss the importance of customer service. 

  • UNIT STANDARD DEVELOPMENTAL OUTCOME 
    N/A 

    UNIT STANDARD LINKAGES 
    N/A 


    Critical Cross-field Outcomes (CCFO): 

    UNIT STANDARD CCFO IDENTIFYING 
    Identify and solve problems and make decisions using critical and creative thinking when performing a variety of calculations regarding inventory. 

    UNIT STANDARD CCFO ORGANISING 
    Organise and manage themselves and their activities responsibly and effectively to perform calculations. 

    UNIT STANDARD CCFO COLLECTING 
    Collect, analyse, organize and critically evaluate information to perform the different types of calculations. 

    UNIT STANDARD ASSESSOR CRITERIA 
    N/A 

    REREGISTRATION HISTORY 
    As per the SAQA Board decision/s at that time, this unit standard was Reregistered in 2012; 2015. 

    UNIT STANDARD NOTES 
    N/A 

    QUALIFICATIONS UTILISING THIS UNIT STANDARD: 
      ID QUALIFICATION TITLE PRE-2009 NQF LEVEL NQF LEVEL STATUS END DATE PRIMARY OR DELEGATED QA FUNCTIONARY
    Elective  57712   Further Education and Training Certificate: Generic Management  Level 4  NQF Level 04  Reregistered  2023-06-30  As per Learning Programmes recorded against this Qual 


    PROVIDERS CURRENTLY ACCREDITED TO OFFER THIS UNIT STANDARD: 
    This information shows the current accreditations (i.e. those not past their accreditation end dates), and is the most complete record available to SAQA as of today. Some Primary or Delegated Quality Assurance Functionaries have a lag in their recording systems for provider accreditation, in turn leading to a lag in notifying SAQA of all the providers that they have accredited to offer qualifications and unit standards, as well as any extensions to accreditation end dates. The relevant Primary or Delegated Quality Assurance Functionary should be notified if a record appears to be missing from here.
     
    1. Career Pathing Solutions (Pty) Ltd (KRUGERSDORP) (TP) 
    2. OPTIMUM LEARNING TECHNOLOGIES PTY LTD 
    3. Procurement & Supply Management College cc (ROBERTSHAM) (TP) 
    4. Wide Horizon Advanced Training (PORT ELIZABETH) (TP) 



    All qualifications and part qualifications registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.