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Posts Tagged ‘inventory cost’

The inventory in your warehouse or factory is both an asset and a liability. In any event, when he was sitting right there, it’s worse than worthless – it’s the negative. What pens in the stationary cupboard or multi-million dollar machine tools in the warehouse at the port, the stocks must be stored and removed as a cost effective and efficient as possible. Inventory Optimization is on the management, which in the camp and how these material flows entering and leaving the warehouse. This is the area where most ERP software implementations normally the highest and fastest return on investment. It is therefore surprising that many companies that have implemented ERP have another special optimization of the inventory module, as it offers to maximize the enormous potential for business value from their IT investments for a relatively small increase of costs. It is a fundamental requirement for almost all companies able to meet the levels of customer service requested, with minimal inventory. This means that only the right products in stock in the right quantity and virtually nothing else. excess inventory, cost of capital surplus, the massive impact on the profitability of the bottom line. However, this leads to the potential harm to insufficient stocks to compensate for the loss of revenue lost customers and a negative impact on the profitability of the line. If you just buy could predict exactly what your customers in the future, the portfolio optimization would be very easy. But in reality it is quite difficult. The decision on the correct stock is an important issue, and the answers vary from one sector to another and the organization of the organization. The danger lies in the two understocking pasture. Results of stocking in a number of negative effects: ? Organizations to manage too rigid and difficult ? There is an increased amount of uncommitted funds in non-production goods ? Thus, there is a greater number and value of depreciation ? More products obsolete or outdated ? Storage needs are increasing exponentially, as less is outsourced, because it introduces into ? increase the overhead by all of the above. On the other side of the coin, understocking also has negative effects: ? Service levels are low due to the inability to meet demand ? Customers are disappointed, to say the least ? The agencies are subject to charges and peak express shipping to ensure the availability of inputs ? Business opportunities are lost. The situation is even more complicated, the more accurate prediction is as problematic as the supply chain is increasingly complex. In the days following the Second World War, demand was exceeding production. The companies were more efficient purchasing and manufacturing focused, as you can always sell what you have purchased or produced. Today, the reverse is true. The production is exceeding demand and customers were increasingly demanding. Therefore, an agile supply chain is critical, a response which, if customers demand suddenly a new version of an article, and can can provide more timely manner. Inventory challenges for organizations are: ? Complex global supply chains, increases with the potential outsourcing of manufacturing to countries with low wage countries, freight ? Supply Chain Integration / visibility is limited, especially when using low-cost countries, have to do any advanced computer systems ? customer demand, which may be broad and imprecise ? complex products, with the general configuration and detailed ? subsequent storage needs that may be needed for a wide range of components for the configuration ? shorter product life cycles ? Uncertain future market directions and trends. To make it even more complicated, the challenges of different industries to be addressed differently, what, why agile solutions to meet business needs that are necessary. For example, an example of a vertical industry on inventory issues paper merchants and distributors. Here freight customers manage very large and heavy, and because of weight and volume, it is important to direct delivery from suppliers to customers to have. Delivery must be just in time when a printing company can not put a lot of paper. paper stocks could easily be one of many places, including the factory, warehouses outside the factory or dealer, the dealer for central and regional warehouses maintained even in the printer property. This exploitation of stocks and reduced the requirement for further distribution costs money for each member of the supply chain and to the extent possible, particularly where unnecessary duplication. It is easy, according to the party is to distribute in the most profitable level of service required should be encouraged. The implementation of good practices in this stage requires factories, retailers and printers work together to establish the optimal distribution. This is the cost of empty warehouses and unnecessary travel. The pharmaceutical industry and health care is another area for inventory optimization. Distributors need to move and manage large quantities of products at high speed and precision. This means that the command lines of the recording, storage and collection of thousands of sales to be streamlined. may be the radio frequency identification and support rods inventory management and real-time control to minimize paperwork. Pharmaceuticals storage also strict rules for narcotics and dangerous goods. In other words, the pharmaceutical industry, a system that supports large quantities of products. Most procurement and planning activities to meet the automated as much as possible and get back to the constantly changing demand. Finally, if you’re on the stock-keeping units, electrical components distributors in the hardest hit. Some of them have more than 100,000 stock keeping units. It is important that information is difficult to maintain in the item description file correctly and easily. You must cooperate with suppliers for a system that can easily import new prices of funds. You may also be able to handle large and complex agreements, to purchase items at a good price at the right time. You need a solution that references, so it supports and identify other alternatives, inventory, so that the segmentation of product lines with high turnover may be defined, low margin, high quality, slow, etc., and dynamic demand forecasting, replenishment suggestions, cross-docking, the sales of OTC and seasonal fluctuations. Storage requires a real-time control for on-time deliveries to ensure, without excessive storage. The fact is that more and more industries and sectors are facing the same problem as the electronics industry, companies continue to consolidate and to cooperate. This means that the supply is running at a faster pace and with more volume. Information on the requirements and opportunities to connect and use information has become critical to the process, while the reporting, analysis and planning are increasingly important for everyone. At the same time when there is the complexity of the supply chain, there are also internal challenges – even differing priorities – within the organization. CEOs want to improve customer service, sales wants to sell more products, and CFOs want to reduce inventory. The best and that’s really the only way to properly manage conflicts of interest and the complexity of the old motto: Order the right product at the right quantity and quality at the right time. The objective of any asset management system is to provide the best customer service possible in the restraint of the lowest practical inventory costs. The optimization of resources is a constant balancing. Once you commit your first decision to a optimization program, there are four steps you should follow is: ? Analysis of the current situation, what elements and how to sell delivery, etc. ? Classify objects can be of different categories that define treatment with ease and strategy by product segment ? Calculate the best way to predict the adoption of various measures on different segments ? Control costs by optimizing the replenishment adoption reconstitution of different measures on different segments of the points, and filled with the best possible cooperation with suppliers. Can. . . You do it again. Inventory Optimization is a continuous process of fine tuning of inventory and performance analysis: Are there other parts element that can be improved, how effectively they can be improved and at what price? It is easy when you know how. It is only important that a formal structure that will provide accurate and timely information to follow and allows you to make tactical and strategic decisions about your inventory flow. The next step in this process is to determine how you stand right now – the analysis of your performance.