What is inventory? Some people say that inventory is a crisis; others say that inventory is a business opportunity.
So, what is right and wrong?
Two kinds of inventory
In fact, both statements are correct, there are two kinds of inventory.
One is called safety stock, which is an active inventory to buffer the fluctuations of demand, planning, production and supply, with the purpose of improving the timely arrival rate, increasing customer satisfaction, and winning more business opportunities for enterprises.
The other is called sluggish inventory, which is a passive inventory caused by unexpected fluctuations, and the high sluggish inventory will increase costs, cause waste, occupy a large amount of liquidity, and easily trigger the financial crisis of the enterprise.
What is the cause of sluggish inventory?
1. The plan forecast is inaccurate
Planners are inaccurate in predicting the future and are worried about stocks, resulting in a large number of purchases/productions and sluggish inventory.
2. Over-purchasing
Procurement forecasting does not consider the inventory in the warehouse, inventory in transit, etc.; did not predict the subsequent dosage according to the recent dosage and the amount of the same period; or because of the price factor, in order to reach a certain preferential price, so as to purchase a large number of purchases, resulting in excessive procurement.
3. Warehouse management issues
In the process of warehouse management, the goods have not all realized the storage space management; the accurate and detailed inventory data has not been provided in time; the goods in the warehouse that have exceeded a certain storage period have not been reported in time, and the corresponding reminder marks have not been made; the existing warehouse can be used in time; the warehouse inventory backlog has not been timely feedback, etc., thus continuously generating new material sluggishness.
4. Process changes, design/order changes
The rapid iteration of electronic components updates has led to the rapid replacement of many materials that do not meet the standards; the design and development department has made design changes to the company's products because of the process or customer needs; temporary changes or cancellations of orders and returns by customers will lead to sluggish inventory.
So the question is, how should we prevent the generation of sluggish inventory?
1. Formulate appropriate inventory management policies
Enterprises need to formulate the corresponding inventory management rules and product safety inventory management rules, mainly for the inventory product turnover period restrictions, that is, to limit the time range period of inventory product turnover, if within this time range, it can be regarded as inventory control qualified; at the same time, enterprises need to formulate sluggish inventory management rules, such as early warning cycle, processing methods and so on.
2. Preventive measures in all relevant departments
(1) Planning and production department
The production plan should be in line with the current situation, and when the new and old products are replaced, the plan should be very thorough to prevent the old material from becoming dull; strengthen the coordination of production and marketing, and increase the stability of the production plan.
(2) Purchasing department
Procurement needs to take into account various factors and make reasonable forecasts, reduce improper procurement, and strengthen supplier management.
(3) Warehouse and material control department
Strengthen warehousing management to ensure the consistency of accounts and materials; do a good job of inventory inventory, and timely feedback on abnormal inventory.
3. Application of inventory management system
Zhenghang ERP system inventory management solution, can provide real-time product sales trend analysis. By analyzing the average sales volume and growth rate of recent products, it is recommended to safe stock, which is convenient for procurement or warehouse timely update of product safety inventory; procurement can refer to the frequency of product shipments and the number of customers to determine the safety inventory of this cycle; and the batch change operation of product safety stock can also be carried out through the batch change of safety stock provided by the system in response to the demand for rapid delivery.
In addition, the system also supports the setting of safety inventory thresholds, when the product inventory is higher than the highest inventory or lower than the minimum inventory threshold, the system will give early warning prompts to remind managers to make corresponding in-and-out adjustments to prevent the occupation of corporate capital flow due to inventory overstock.
In short, the causes of sluggish inventory should be traced back to the source, so as to prevent and treat the symptoms in advance. If it is the customer's reason, it is necessary to negotiate with the customer to solve, for the specific customer's special material management, should sign an agreement with the customer before purchasing, to avoid the occurrence of sluggish inventory due to customer changes or cancellation of orders; is the reason for the supplier, it is necessary to strengthen the evaluation and supervision of the supplier, you can send someone to monitor the quality and delivery of materials; for the sluggish inventory that has been generated, try to adjust the processing and minimize the loss.
Note: The illustrations in this article have been authorized