What Is Supply Chain Inventory Management?

Supply chain inventory management refers to the inventory management method that puts inventory management in the supply chain, from the point to the chain and from the chain to the surface, in order to reduce the cost of inventory and improve the market response of the enterprise.

Supply chain inventory management

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The characteristics of supply chain inventory managementThe objectives of supply chain inventory management are subordinate to the goals of the entire supply chain.By planning, organizing, controlling, and coordinating the inventory throughout the supply chain, the inventory of each stage is controlled to a minimum, thereby reducing Inventory management costs, reducing idle and waste of resources, and minimizing overall inventory costs in the supply chain. Compared with traditional inventory management, supply chain inventory management is no longer used as a measure to maintain production and sales, but as a supply chain balancing mechanism. Through supply chain management, the weak links in enterprise management are eliminated to achieve the overall balance of the supply chain. The theory of supply chain management is the development of modern management ideas, and its characteristics are mainly reflected in:

First, integrated management

Supply chain management regards all nodes in the supply chain as an organic whole. Based on the supply chain process, logistics, information flow, value flow, capital flow, and workflow run through the entire process of the supply chain. Therefore, supply chain management is an integrated management.

Second, the scope of resources has expanded

Under the traditional inventory management model, managers only need to consider the effective use of internal resources of the enterprise. After the introduction of the supply chain management model, the scope of enterprise resource management has expanded, requiring managers to take all the resources of the nodes in the entire supply chain into consideration, so that the resources in the supply chain can be optimally used.

Third, partnerships between enterprises

Supply chain management is centered on the end customer, and takes customer service, customer satisfaction and customer success as the starting point of management, and runs through the entire process of supply chain management. As enterprises actively pay attention to the management of the entire supply chain, the partnership between member companies in the supply chain has been strengthened, and the original competition relationship has changed from a "win-win" relationship. The formation of the supply chain has established a strategic cooperative relationship between companies in the supply chain. Through rapid response to the market, they have been working together to reduce the overall inventory of the supply chain. Therefore, inventory management is no longer a measure to ensure the normal production and operation of enterprises, but a mechanism to balance supply chain management.

VMI (Vendor Managed Inventory)

Supply chain inventory management is not simply demand forecasting and replenishment, but to improve customer service and increase revenue levels through inventory management. The content of supply chain inventory management mainly includes: using business modeling technology to evaluate the accuracy of the company's inventory strategy, lead time and transportation changes; when measuring the economic order quantity of inventory, consider the impact on the supply chain company; fully understand the inventory status, Determine appropriate service levels. At present, the problems of inventory management under supply chain management mainly focus on three aspects: information, supply chain operation, and supply chain strategy and planning. These problems are manifested in the following aspects: (1) The overall concept of supply chain management requirements has not been formed. Many supply chain management systems do not have a global supply chain performance evaluation index, and each node company has its own way, resulting in the overall efficiency of the supply chain is low.

(2) The information transmission system is inefficient. Supply chain inventory management emphasizes collaboration and information sharing. Demand forecasting, inventory status, and production planning of each member company in the supply chain are all important contents of supply chain inventory management. To respond quickly and effectively to the needs of customers, companies must have real-time and accurate information on the members of the supply chain. At present, many enterprises' information transmission systems have not yet been established, and the customer demand information learned by suppliers is often delayed or inaccurate, making it difficult to implement short-term production plans. Therefore, an efficient information transfer system should be established to effectively transfer supply chain inventory management information and improve supply chain inventory management performance.

(III) The supply chain has uncertainties. The reasons for the formation of supply chain inventory can be divided into two categories, one is the general inventory established for production operations, and the other is established to prevent uncertain factors in the supply chain. Insurance stock. When formulating inventory plans, companies cannot take into account the impact of uncertain factors, such as fluctuations in demand caused by market changes, shortages caused by unexpected changes in suppliers, production interruptions caused by unexpected events within the enterprise, etc., which will affect inventory. . Uncertainty is the main reason why companies build insurance stocks. Researching and tracking the impact of uncertainty on inventory is a major challenge for supply chain inventory management.

(4) Lack of cooperation and coordination Each member company in the supply chain is a whole, and requires the coordination and cooperation of each member company to obtain the best operating results. However, if there is a lack of mutual trust between enterprises, it will increase the difficulty of coordination and cooperation between enterprises. The lack of mutual trust between enterprises is the root cause of the instability of the cooperative relationship between supply chain enterprises. Therefore, effective supervision and incentive mechanisms need to be established between member companies to promote communication and cooperation between enterprises. Compared with the establishment of supervision and incentive mechanisms for various departments within an enterprise, it is much more difficult to establish supervision and incentive mechanisms between enterprises.

(5) The product design did not consider the impact of supply chain inventory costs. Modern manufacturing technology has greatly improved the production efficiency of the company's products, and its gross profit margin is high. However, the complexity of supply chain inventory is often overlooked, so that the cost savings during product production are offset by the distribution and inventory costs in the supply chain. At the same time, in the design of the supply chain structure, the impact of inventory costs needs to be considered.

Based on the characteristics of supply chain inventory management and the problems of supply chain inventory management, supply chain inventory management should be improved from the following aspects:

First, the overall concept of the supply chain must be established.

On the basis of ensuring the overall performance of the supply chain, the realization of inventory management cooperation among the members of the supply chain requires analysis of various direct or indirect factors, such as the common goals, common interests, and value pursuits of the supply chain enterprises. On the basis of full sharing of information, by coordinating the efficiency indicators and evaluation methods of various enterprises, each member company of the supply chain can reach a consensus on inventory management. Starting from the overall situation, a "win-win" business philosophy is established, and mutual needs are consciously coordinated. Then set up a supply chain inventory management system, so that all participants in supply chain inventory management can achieve consistency in performance evaluation content and methods, and fully share inventory management information.

Second, we must streamline the structure of the supply chain.

The supply chain structure has an important impact on supply chain inventory management. The supply chain is too long, and the relationships between the nodes in the supply chain are too complicated, which is one of the main reasons for the poor transmission of information in the supply chain and the high cost of supply chain inventory. Optimizing the structure of the supply chain is the key to ensuring smooth coordination of information transmission among the nodes of the supply chain, and the basis of doing a good job of managing supply chain inventory. Therefore, we should try our best to make the supply chain structure develop towards a flatter direction, streamline the number of nodes in the supply chain, and simplify the relationship between the nodes in the supply chain.

Finally, the various links in the supply chain are effectively integrated.

Integrating the various links in the supply chain is to form a "virtual organization" on the basis of common goals, and optimize the organizational goals and overall performance by sharing information among members within the organization, and mutual adjustment of funds and materials. By integrating various links in the supply chain, the impact of the overly complex supply chain inventory management system on the efficiency of supply chain inventory management can be overcome to a certain extent, so that the supply chain inventory management data can be transmitted to each node in real time and quickly, thereby greatly reducing Supply chain inventory costs, respond quickly to customer needs, and improve the overall performance of supply chain inventory management.

Supply chain inventory management emphasizes the long-term cooperation between nodes, and a clear institutional arrangement is needed to strengthen the durability of cooperation between nodes, so as to suppress the opportunistic behavior of nodes. North proved that when the transaction cost is positive, the system is important. Establishing a reasonable supply chain inventory management mechanism is an important method to maintain the stable and healthy operation of the supply chain inventory management system. The establishment of supply chain inventory management mechanism should mainly start from the following three levels:

The first level is to establish a coordination and management mechanism for supply and demand planning.

Including the establishment of common cooperation goals, inventory optimization plans and coordinated control methods, information communication channels, the establishment of benefit distribution and incentive and constraint mechanisms, and risk sharing mechanisms to ensure the accuracy and timeliness of information transmission in the supply chain.

The second level is to establish a supply chain inventory operation mechanism.

It mainly includes the formulation of various rules and regulations related to the operation of inventory logistics in the supply chain, including contract rules, collaborative transaction rules, inventory information sharing rules, order processing rules, and receivables and accounts payable financial settlement rules, to ensure that each node in the supply chain The virtuous circle of cooperation between enterprises and the smooth progress of production and operation.

The third level is to establish a supply chain inventory management performance evaluation system.

Such as the use of financial indicators, internal process evaluation indicators to assess the degree of cooperation between enterprises and operating conditions. Through the analysis and comparison of the assessment results, we found problems in inventory management and took timely improvement measures.