Inventory management - techintroduce

Basic content

Introduction

Inventory management is the management of enterprise inventory, which mainly includes inventory information management and decision-making analysis based on this, and finally effective control. To achieve the ultimate goal of inventory management and improve economic efficiency. Fiberhome headhunting experts believe that inventory management is a comprehensive process of operationalizing the inventory policy of the manufacturer and the inventory policy of the value chain. The reaction method or pull inventory method is to use customer demand to pull product delivery through distribution channels. Another management concept is the planning method, which proactively schedules the transportation and distribution of products in channels according to demand and product availability. The third method, or hybrid method, uses logical reasoning to combine the first two methods to form an inventory management concept that responds to the product and market environment. A comprehensive inventory management strategy will detail various policies and be used to determine where to arrange inventory, when to initiate replenishment shipments, and how much inventory to allocate.

Connotation of inventory management

Inventory refers to the finished products or commodities that an enterprise holds for sale in the normal production and operation process, or the products that are still in the production process, or are in production. Materials, materials, etc. that will be consumed in the process or the process of providing labor services. It is a barometer that reflects the operation of corporate liquidity, and often becomes a regulator used by a few people to adjust profits and evade national tax and fee funds. Because it not only accounts for a large proportion of the working capital of a company, but it is also a current asset with poor liquidity.

Target

The reason why companies keep inventories is on the one hand to ensure the business needs of production or sales, on the other hand, it is due to price considerations. The price of zero shopping is often higher. , And the whole batch purchase has a preferential price. However, excessive inventory will take up more funds, and will increase various expenses including storage fees, insurance fees, maintenance fees, and management staff salaries. Therefore, the goal of inventory management is to try to optimize various costs and inventory benefits. Make a trade-off between and achieve the best combination of the two, this is the goal of inventory management.

Causes of the problem

Overview

There are problems and reasons in current enterprise inventory management

1. Inventory income, delivery, and balance lack truthfulness record.

Material requisition records production costs and the collection and transfer of expenses have many human factors, especially in the accounting of engineering projects. For example, if two job numbers A and B are started at the same time, the accounting records at the end of the month show that the material consumption of the B job number is very small or even zero, while the material consumption of the A job number is a large amount; the raw and auxiliary materials have been used and consumed In fact, the cost has not been carried forward accordingly; the raw and auxiliary materials have not been used and consumed, but the cost has actually been carried forward; the purchased materials have been used and consumed, the purchase invoice has not arrived, and the end of the period has not been temporarily Estimated warehousing, resulting in a decrease in inventory records at the end of the balance sheet and even a scarlet balance.

2. The internal control system is not sound.

In the process of material procurement and product sales, the same person often completes the entire process of procurement and sales, payment and receipt, storage and delivery, which makes the procurement and sales work unruly, and provides a hotbed for black-box operation. , Increasing the possibility of private fraud.

3. The amount of working capital occupied is high.

Due to the large inventory, the occupation of working capital is high, and some companies’ inventory reserves account for more than 60% of the total working capital, which brings great difficulties to the turnover of corporate working capital.

4. Abnormal inventory reserves squeeze the normal inventory reserves.

In order to control the amount of working capital occupied, in the daily inventory management, the inventory occupancy is reduced as much as possible, and the purchase volume is reduced, which affects the reasonable inventory reserve required for normal production and operation.

5. Management is not in place.

Damage to be scrapped and overstocked inventory reserves must be reported as a key issue in the annual liquidation and capital verification, but it is only reported every year, without the approval of the superior authority, and no processing results. As a result, the amount of damaged and overstocked inventories that are to be scrapped and overstocked has become larger and larger like a snowball, and the problem has not been fundamentally solved.

Solutions

Analysis of the ways to improve the level of enterprise inventory management

1. Strictly implement the financial system regulations to make the accounts, materials and cards consistent. (Card refers to material purchase card, requisition card, inventory card)

Inventory management must strictly implement the financial system regulations. For the inventory that has not arrived at the invoice, the temporary assessment and storage procedures should be processed in time at the end of the month. Make the accounts, objects, and cards match.

2. Adopt ABC control method to reduce inventory and speed up capital turnover.

The daily management of inventory is divided into three types: ABC according to the importance of inventory. Category A inventory varieties account for 10% to 15% of total inventory, and funds account for about 80% of total inventory. Key management, such as large-scale spare parts, etc., is implemented. Class B inventory is general inventory. Varieties account for 20% to 30% of total inventory, and funds account for about 15% of total inventory. It is appropriately controlled and daily management is implemented, such as daily production and consumption of materials. Category C inventory varieties account for 60% to 65% of total inventory, and funds account for about 5% of total inventory. General management is carried out, such as office supplies, labor insurance supplies, etc., which can be purchased at any time. After ABC classification, we will seize key inventory, control general inventory, and formulate a more reasonable inventory purchase plan, so as to effectively control inventory inventory, reduce the occupation of reserve funds, and accelerate capital turnover.

3. Strengthen inventory procurement management, rationally operate procurement funds, and control procurement costs.

First of all, planners must have high professional quality, have a full understanding of the production process and equipment operation, master equipment maintenance, spare parts consumption and production consumption materials, and then make Scientific and reasonable inventory purchase plan. Second, we must standardize procurement behavior and increase the transparency of procurement. Based on the principle of economy, the purchaser must dynamically monitor the quality, price, and financial reputation of the supplier; collect all kinds of information and compare products of the same kind to achieve the lowest price and the best quality; at the same time, it is necessary for bulk raw materials , The large-scale spare parts are purchased through bidding to eliminate black-box operations and black holes in procurement. In this way, it not only ensures the normal production, but also effectively controls the purchase cost, accelerates the capital turnover, and improves the efficiency of capital use. 4. Make full use of advanced management models such as ERP to realize the information management of inventory funds.

In order to make inventory management meet the requirements of modern enterprise management, enterprises must adopt advanced management models, such as ERP systems, as soon as possible. The use of ERP enables comprehensive scientific and efficient centralized management of people, finances, materials, production, supply, and sales, plugging loopholes to the greatest extent, reducing inventory, and bringing inventory management to a new level.

Changes

Inventory management-three changes:

In 1953, Toichi Ohno, the vice president of Toyota, Japan created a high-quality, low-inventory Production mode--JustInTime (JIT). JIT technology is the first revolution in inventory management. Its basic idea is to "produce the required products only when needed, according to the required quantity", that is, to pursue a production system with no inventory or minimum inventory. . In Japan, JIT is also called "kanban" management. There is a sign in every container that transports parts. The manufacturer opens the container and gives the sign to the supplier. After receiving the sign, the supplier starts to prepare the next batch of zeros. part. Ideally, when the next batch of parts arrives, the manufacturer just runs out of the previous batch of parts. By accurately coordinating production and supply, Japanese manufacturing companies have greatly reduced the inventory of raw materials, improved their operational efficiency, and increased their profits. In fact, JIT technology has become an important source of competitive advantage for the Japanese automobile industry, and Toyota has also become one of the world's most leading companies in JIT technology.

The impetus for the second revolution in inventory management comes from the extensive application of technologies such as CNC and sensing technology, precision machine tools, and computers in the factory. These technologies have shortened the preparation time of the factory from the earlier hours. To a few minutes. With the help of the computer, the machine quickly switches from a preset tool and mold state to another tool and mold state without the need to go to a remote tool room or perform a trial run and adjustment after manual processing. The preparation work is accelerated. The structure of the idle time has undergone a key change, and the inventory of products and indirect costs that are trapped in traditional factories have also been reduced. Still, Toyota took the lead in pioneering this area in the 1970s. As Toyota's engine supplier, Yanmar Diesel imitated Toyota to reform its operating procedures. In less than five years, it almost quadrupled its models, but its inventory of work-in-progress was reduced by half. The overall labor productivity of product manufacturing has also increased by more than 100%.

Inventory management

After the rise of information technology and Internet technology in the 1990s, the third revolution in inventory management took place. Through the application of information technology in the enterprise (such as ERP, MRPⅡ, etc.), the production plan and marketing information of the enterprise can be fully shared, and the planning, purchasing, production and sales departments can also be better coordinated. The Internet technology can make production forecasts more accurate and reliable than before. Dell is a successful practitioner of this revolution. It makes full use of information technology and Internet technology to launch online direct sales and customize products according to customer requirements. In the beginning, when the Internet was still limited to a few scientific research and military purposes, Dell could only conduct direct sales through networks such as telephones. However, after the Internet gradually became more popular, Dell organized production according to customers’ online orders and provided completely personalized services. Products and services. Dell has put forward the three golden rules of "abandoning inventory, constantly listening to customer opinions, and never indirect sales." Dell has completely eliminated finished product inventory, and its parts inventory is calculated by the hour. When its sales reached 12.3 billion U.S. dollars, the inventory was only 233 million U.S. dollars, and the cash turnover period was negative 8 days.

Function

To manage inventory, you must first understand the role of inventory management. Based on the utility of inventory, it can be divided into four types: periodic inventory, safe inventory, expected inventory, and pipeline stock.

Periodic inventory

There are many goods that have a more stable need, that is, they are often used or sold gradually, so they have a more stable need. However, if the demand is It is not economical to purchase or produce at a high rate, so in order to meet economic benefits, it must be mass-produced first, and then stored and used gradually.

Safety stock

Safety stock (safetystock) refers to the amount of stock in hand that is sufficient to meet unexpected demand or the delivery of supplies, provided that the future demand and the time required for delivery can be If determined, the safety stock is completely unnecessary.

Anticipation inventory

Anticipation inventory (anticipationinventories) is to build inventory in case of an increase in demand or a decrease in supply. This inventory method is often suitable for seasonal demand products. Take the toy industry as an example. Toy manufacturers build up the inventory needed throughout the year for sales in December. However, production usually requires a level operation. The change in operating standards is wasteful. This change leads to higher wage costs and termination costs, overtime and labor sabotage costs, inefficient use of equipment, and lower quality and productivity.

Pipeline inventory

Pipeline inventory management is the management of inventory during and during transportation, including supplier’s freight, transportation between two workstations in the factory, and support. Railroad transportation between warehouses, routes from warehouses to retailers, and even delivery to the shelves of retail stores. The quantity of inventory depends on the flow of raw materials and the time required.

Management significance

1. It can help enterprise warehouse managers to carry out detailed and comprehensive control and management of inventory goods;

2. Help inventory accounting for inventory Commodity accounting;

3. The various inventory reports and inventory analysis provided can provide a basis for the company’s decision-making;

4. Reduce inventory, reduce capital occupation, and avoid overstocking Or shortage, to ensure the smooth progress of business activities.

As an important liquid asset, inventory is bound to occupy a large amount of liquidity. In general, inventories account for about 30% of the total assets of industrial enterprises, while those of commercial circulation enterprises are even higher. The management and utilization of the inventory directly affects the level of capital occupation of the enterprise and the efficiency of asset operation. Therefore, if an enterprise wants to maintain high profitability, it should attach great importance to inventory management. Under different inventory management levels, the average capital occupation level of enterprises varies greatly. Through the implementation of correct inventory management methods, the average capital occupation level of enterprises can be reduced, and the inventory circulation speed and total asset turnover rate can be improved, so as to ultimately improve the economic benefits of enterprises.

Importance

Under the influence of domestic financial liberalization, corporate internationalization and securities market diversification, financial management (Financial Management) has become an important business demand One link is also a topic that managers are extremely concerned about. The scope of financial management is very wide, mainly investment management, financing management, operation management, etc. The current asset management in operation management includes cash management, accounts receivable management and inventory management. Among them, inventory management (Inventory Management) is the most current enterprise. Pay attention; according to the famous Moore's Law, electronic computing components will be concentrated in the chip. Due to advances in technology, computing power will double every 18 months, resulting in a short life cycle of high-tech products. The sales boom for a new product is often only 3-9 months, so inventory management becomes even more important.

Inventory is a current asset on the balance sheet. However, from the viewpoint of inventory management, inventory is not an asset but a backlog of costs. Although insufficient inventory may not be able to meet customer needs, some orders will be lost; however, Excessive inventory will also backlog the company's funds. In addition, in accordance with the domestic accounting standards No. 35 Bulletin, asset impairment assessment, if it is a sluggish item, it will immediately affect the company's current profit and loss.

Introduction to knowledge

Relevant costs

The costs related to inventory can be roughly classified into the following three types:

1. Carrying Cost (CarryingCost)