The inventory management system at the enterprise

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2020-04-30 09:00:24

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The inventory Management is an important part of management policy available at the enterprise circulating assets. The main purpose – to ensure continuity of production processes and sales of products and minimize the total costs that go to service inventory. And this was affected by the automation. Helps us with the inventory management system at the enterprise.

General information

system of inventory managementInventories include not only materials and supplies that are necessary for the implementation of the production process, but not ready products and goods that can be realized. Important is to control their volume. Insurance stocks should always be, because of seasonal surges in consumer demand and disruptions in supply has not been canceled. And all this can have a negative impact on financial performance. Of course, it should be noted that this can be attributed to the stocks, but on the other hand – they provide stability and liquidity of the company. If there will be a deficit, then stop production, will fall in sales volumes, but may also occur such a situation that you have to buy a batch of raw materials or materials at an inflated price. As a consequence – the company will not receive potential profit. Also due to the fact that stocks are liquid assets, their reduction will lead to a deterioration of the current regulatory status of the company. But it is necessary to adhere to Golden mean. So, excess reserves can lead to the fact that will increase the cost of their storage, will have to pay the property tax. You can also receive possible income due to the fact that the financial resources will be frozen for raw materials. In addition, you should not let go of the attention and the fact that they are subject to moral ageing and physical deterioration.

Approaches

Speaking about inventory management, it should be noted that before the control element is a choice of three plans of activities concerning the formation of reserves. They differ different levels of return and risk:

  1. Conservative approach. In it the emphasis is not only on meeting all existing needs for raw materials, materials and semi-finished products. Also provides for the establishment of large reserves in case of supply disruptions, worsening the conditions in which products are produced, there might be delays associated with collection of receivables, aktiviziruyutsya consumer demand. The use of this approach affects the level of profitability and positive - on the possible risk.
  2. A Moderate approach. Provides for the creation of reserves for the most typical failures that can occur when the company's operating activities. The calculations in this case are based on data from previous years. In this case the average level of profitability and risk.
  3. Aggressive approach. In this case, there is a minimum level of reserves (although they may be completely absent). If during the implementation of the operational process will not have a failure, the company will receive the best result of effectiveness. But if problems occur, the company incurs significant financial losses. Thus, it is possible to obtain the most profit, but there is a significant risk of loss.

Governance Model: factors

development of stock management systemAll that was before – theoretical training. Now we will consider the development of a stock management system for the enterprise. To do this we need to consider a number of factors:

  1. The Conditions on which the purchased inventory (the volume of deliveries, frequency of orders, credits and rebates).
  2. Features realization of final products (demand, reliability and dealer network development, the change in the level of sales).
  3. Characteristic nuances of the production process (of feature of technology of creation, the duration of training and direct support of the products).
  4. Costs that occur during storage (freezing of funds, possible damage, storage costs).

The inventory management System at the enterprise can be built on several specified methods. Each of them has its own specific features.

Model Wilson

Is Used for inventory management in the logistics system was optimized to the maximum. It can be applied to obtain the answer to these questions: what inventory should be; what volume of materials and raw materials needed per unit of time; the optimal size of the deliveries. Besides them there are other provisions that need to be addressed. According to the model of Wilson can prove to be sure that the company is interested in raw materials and products to order as large quantities. In this case, it will be minimized spending on transportation costs, registration and the like. And this will directly affect the profitability of the company. It also allows you to choose the minimumacceptable regulatory level of reserves, which will allow you to avoid the high operating costs that go to the storage of raw materials, materials and semi-finished products. What are the parameters of inventory control system in this case? To use the model, you need to know:

  1. That it can be applied only for one kind of goods. The quantity needs to be continuously measured.
  2. The Level of demand for specific goods which are constant in time.
  3. Products are manufactured in separate batches.
  4. Orders come in a separate delivery, which entails additional costs.
  5. Inventory occur continuously.
  6. Delivery and costs on orders are constant values (or needs to output the average number). And in this case, means of transport, operating and other expenses.
  7. Deals with the additional supply of products and discounts for large volume orders.

What is used in practice?

analysis of stock management systemWhat are the main systems of inventory control are used? What are their characteristics? Let's look at an example. And as a study object will be the system of control over the stocks of ABC. It is built on volume-cost analysis, which separates all types of stocks for certain groups of dependent variables of implementation and profits. In many cases, it may be that 70-80% of all sales falls on 10-20% of the goods. It's the Pareto principle in action. In such cases, the inventory management system provides focus on most important products and goods, and to manage them efficiently, not to spend extra money on less important areas. In the framework of the critical value, the amount and frequency of spending, the consequences of the shortage of certain raw materials, and the like. The distinction is made on different categories. May we and consider them.

Classification categories of the ABC system

There are three:

  1. Category A. these include the most expensive types of stocks that have a long cycle of use. They require permanent monitoring, as in the case of their disadvantage will be serious financial implications. To determine when is optimal to implement their delivery, using the model described above Wilson. Specific commodity-material values, generally available in very limited quantities and require a weekly inspection.
  2. Category V. this includes material assets in ensuring the smooth operational process and forming the final financial result. Typically stocks from this group only control 1 time a month.
  3. Category S. System for inventory management ABC this includes all inventory items having a low cost and which do not play a significant role in the formation of final financial result. The volume of procurement in this case is quite large. Control stock movement is carried out, as a rule, no more than once per quarter.

Cost of inventory

the parameters of inventory control systemIn practice, for this purpose you can use the following methods:

  1. LIFO. In this case, mitigated the impact of inflation, when the profit is formed. This method is suitable if you want to have an objective assessment of the result. The positive side is that it reduces the magnitude of the property tax.
  2. FIFO. Positive effect on liquidity, reduces costs and increases profit.

Summarize

What is a inventory management system? A full complex of measures aimed to create and restock, and organize continuous monitoring and operational planning of deliveries. The major role is played by the feedback, or rather how it is implemented. The best result – when the representatives managers can quickly obtain all the necessary data to make decisions and implement them. For this widely used automation tools. For clarification, the device can work with a three-level model.

Implementation

inventory management in the logistics systemOn the first level information about the material inventory system inventory managementformed thanks warehouse software and databases. Thanks to them you can get all the information about the movement of raw materials and semi-finished products, as well as information on the loading or shipment of something. The second level system is formed of different models of inventory management. They use all the necessary mathematical apparatus, which allows to estimate the current stock status and develop recommendations for effective management. On the third level uses the model of financial management, and implemented in software restrictions that allow you to monitor the financial condition of stocks. In this case, the assessment of economic efficiency of decisions, defined the sources for the purchase of raw materials. In addition, this model deals with the overall financial strategy of inventory management. The presence of software implementation and automation can significantly increase efficiency and ultimately save the state economic workers.

Improvements

Actively raises the question: why should we spend improving the system of inventory management? First, you need to ensure that the right information was available at any time. This invaluable help can provide cloud technology. They will provide data from an arbitrary point of the globe – just would be the Internet. Besides the most advanced systems of inventory management have algorithms of calculation of expenses of raw materials. Therefore, they can provide high quality forecasts and recommendations when you need to replenish warehouses. In this case, the role of the individual is reduced only to the ordering and tracking of normal system operation.

Create ASU

main stock management systemYou create an automated control system. In this case, for the algorithm of considerable importance will represent the following factors:

  1. Capacity.
  2. Size of Required reserves for the normal functioning of the enterprise.
  3. The Volume of products that are made for certain periods of time (these are day, week, month). In some cases, maybe even as the basis to be year.
  4. Inventory Levels at the time of introduction of the system in operation.
  5. The Frequency of the implementation of the deliveries.

MRP

This is also a inventory management system. We consider it as an alternative to the previously mentioned AVS. There are two configurations: MRP-1 and MRP-2. The first is processed and corrected information about the arrival, movement and consumption of inventory. Also provided replenishment strategy and control for each position. To solve the management problems, there is a special file of orders, which contains all the information. MRP-2 has a wider range of functions. It includes operational and financial planning, and logistics operations. Analysis of the inventory management system allows you to know where, what and how much to eat.

Conclusion

the inventory management system at the enterpriseThe inventory management System is necessary for any business that is planning for a long time to operate successfully. Because it allows for control and replenishment of reserves. Important role as a structural element of play automation. We can safely say that they will gradually improve, and in future we will be able to see this structural part of the company as a stand-alone system that only needs to be set up. To carry out the activities she will be able.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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