What Is Inventory Management?

Inventory management refers to the management of the quantity of goods in the logistics process. In the past, there were many goods in the warehouse, indicating that the enterprise was developed and thriving. And modern management sciences such as MBA, CEO12 and EMBA think that zero inventory is the best inventory management. More inventory, more capital, and increased interest burden. However, if the inventory is reduced too much, a stall will occur.

Inventory management

(Management Terminology)

According to the outside world

(1) Vendor Managed Inventory (VMI)

In recent years,

1. Inventory management with branch structure and multiple warehouses

2.Inventory management

3. Lending and return management of inventory

4.Inventory sample management

5.Inventory occupation fund management

6, on time

In the past, inventory management was mostly performed in the form of tables, reports were not timely, and statistics were very inconvenient. ERP and

(1) Seek effective use of capital. If there is a long-term backlog of redundant materials, it will be the most headache for the normal operation of funds. To prevent capital rigidity, a virtuous circle of funds can generate profits.

(2) Maintain a minimum inventory to ensure the smooth flow of sales, so that the amount of products in stock reaches a minimum that does not cause shortage of inventory, and avoid backlog of funds.

(3) Grasp inventory status as early as possible to deal with excess inventory and shortage in time.

(4) Save inventory costs. Properly keeping inventory can save inventory costs. Inventory costs require approximately 24% to 25% of total inventory annually. In 1974, the Japan Materials Management Association's questionnaire survey concluded that it was 24.06%. Since then, it has been estimated that it has reached more than 30% due to rising labor costs. The increase in this amount has put a lot of pressure on the operation of funds and deteriorated operating efficiency.

(5) For the economic benefit of the enterprise. If you keep more inventory, you will accumulate funds. If you have insufficient inventory, you will also waste money. Only by properly storing inventory can you obtain effective operations.

(6) The level of stable operation can reduce or maintain manufacturing costs.

(7) Promote production and prevent insufficient stocks. The purpose of inventory is to reduce the shortage of materials in cooperation with production, and to exist as a guarantee of material supply and promotion of production during the production period.

(8) shorten

(1) The role of inventory control

Mainly: on the premise of ensuring the production and management needs of enterprises,

1) Occupy a lot of funds of the enterprise;

(2) Increased product cost and management cost of the enterprise;

(3) Concealed many management problems of the enterprise, such as poor planning, poor purchasing, uneven production, unstable product quality, and poor market sales.

1. Buy now

Means that when the product is put in

Problems in traditional enterprise inventory management

Inventory management is an important part of enterprise management (this article takes manufacturing enterprises as an example). In the production and operation activities of an enterprise, inventory management must not only ensure the demand for raw materials and components in the production workshop, but also directly affect the purchasing and sales activities of the purchasing and sales departments. In order to revitalize the working capital of the enterprise, speed up the capital turnover, and under the premise of ensuring the supply, minimize the pressure on the warehouse, which directly affects the operating efficiency of the enterprise. According to the survey and reference to the inventory management situation of many manufacturing enterprises in China, it is found that the following problems generally exist in the inventory management of manufacturing enterprises:

(1) The inventory information cannot be obtained in time. During the operation of an enterprise, sometimes it is necessary to know the current inventory of various parts and components. However, due to the large number and variety of parts and components, careful accounting is required. This is not only time-consuming, but also prone to errors, which affects the rapid and efficient operation of the enterprise.

(2) The inventory information is not accurate enough.

At present, with the continuous development of society and economy, and the development of science and technology, the application of e-commerce in China is getting higher and higher. More and more companies are entering the e-commerce industry.

In view of the uniqueness of the e-commerce industry, a special system suitable for e-commerce website inventory management has appeared on the market.

In the past two years, merchants have not only grown rapidly in number, but also the size of individuals is not the same as before; more and more e-commerce merchants have appeared in the form of enterprises or teams. For e-commerce business managers, improving collaborative work efficiency; protecting sensitive data; and deep mining of business data have become especially important, and these are not what the sales platform can provide. Based on such requirements, some software take

System initial

Basic data: warehouse information, storage location, composition information, inventory common data, etc.

The system supports operations such as querying, printing, adding, modifying, and deleting basic data.

Coding scheme: define coding schemes for cargo classification, inventory attributes, departments, subcategories, etc.

2. Daily business:

(1) Purchasing warehouse receipt The purchasing warehouse receipt generally refers to the warehouse receipt document completed when purchasing the raw materials for inspection; the enterprise generally refers to the purchase of goods.

Inventory management should specifically consider the following two issues:

First, according to the sales plan, when the products produced according to the plan are circulated on the market, it is necessary to consider where and how much to store.

Second, the issue of determining inventory levels and how to ensure replenishment is based on service levels and economic benefits.

The above two issues are related to the function of inventory in the logistics process.

In general, the inventory functions are:

(1) Prevent stalls. Shorten the time from order acceptance to delivery to ensure quality service while preventing stockouts.

(2) Ensure proper inventory and save inventory costs.

(3) Reduce logistics costs. Use appropriate time intervals to supplement the reasonable amount of goods in line with demand to reduce logistics costs and eliminate or avoid the impact of sales fluctuations.

(4) Ensure the planning and stability of production to eliminate or avoid the impact of sales fluctuations.

(5) Show function.

(6) Reserve function. Store in large quantities when prices fall, reduce losses, and respond to emergency needs such as disasters.

Regarding where the warehouse (inventory) is placed, the quantity and location must first be considered. if

1.Information communication for supplier inventory management

supplier

To implement supplier inventory management, we must first have a good information communication platform. Based on the EDI owned by the original enterprise, we must re-integrate the original EDI resources to build an information communication system suitable for supplier inventory management.

2. Workflow design of supplier inventory management

After the buyer enterprise and the supplier implement the VMI, they must carry out the work process for the VMI to ensure the implementation of the entire strategy.

The entire implementation of supplier inventory management is transparent, and the buyer company and supplier can monitor at any time. It is mainly divided into two parts:

Inventory management part: actually

1. Reasons for increased inventory

(1) There was an error in the prediction of the order by the sales department. Order changes, delays or suspensions caused by inaccurate forecasts of future economic changes.

(2) The design department's plan is incomplete. There is an error in the grasp of the required quantity of materials due to immature and imperfect technology.

(3) Poor inventory management methods. Increasing inventory due to poor management of managers.

(4) The manufacturing process is delayed. Due to manufacturing

Economic effect

In 1915, F.W. Harris of the United States published a model on economic order quantities, which initiated the study of modern inventory theory. Prior to this, Italy's V. Pareto proposed Pareto's law when studying the issue of world wealth distribution. The ABC taxonomy is used for inventory management. With the scientific management, the theory of inventory management has been greatly developed, and many inventory models have been formed, which have achieved significant results in the application of enterprise management.

Classification of inventory management models:

(1) Different production and supply situations use different inventory models. Classified according to the order method, it can be divided into 5 order models.

Regular quantitative model: The quantity and time of ordering are fixed.

Periodic non-quantitative model: the order time is fixed, and the order quantity is determined by the difference between the actual inventory and the highest inventory.

Quantitative irregular model: when the inventory is lower than the order point, replenish the order, and the order quantity is fixed.

Irregular and irregular model: the order quantity and time are not fixed.

The above 4 models belong to the situation where the supply is sufficient and the order can be replenished according to the demand at any time.

Regular quantitative model of limited purchase rate: There are restrictions on the supply of goods, and it is necessary to purchase goods one after another.

(2) The inventory management model can be divided into two types, deterministic and probability, according to the supply and demand. The main parameters of a deterministic model are known exactly; some of the main parameters of a probabilistic model are random.

(3) According to the purpose of inventory management, it can be divided into two types: economic and security. The main purpose of the economic model (Figure 1) is to save funds and improve economic benefits; the main purpose of the safety model is to ensure normal supply, and to increase the safety stock and safety reserve period, so that the possibility of shortages is reduced Minimal. Although there are many models of inventory management, it is the principle of inventory management to comprehensively consider various contradictory factors to obtain better economic effects. ^[1]