Inventory management refers to the statistics and management of various items, raw materials, finished products, etc., needed in the production or operation of the enterprise. It is common in the production and manufacturing industries. Reasonable inventory management can ensure the uninterrupted supply of materials consumed by the enterprise. Meet the needs of production and daily operations.
Excessive or insufficient inventory will have an adverse effect on the company. Insufficient inventory will affect distribution, loss of sales, reduced customer satisfaction, productivity bottlenecks, etc.; while excess inventory will take up too many resources, and these resources will produce greater benefits if used elsewhere. Although overstocking seems to be the less harmful of the two types of defects, if the overstocking situation is more serious, its cost is very alarming, so it should be avoided as much as possible in inventory management.
To prevent the shortage of stocks, the minimum standard of stock is the minimum stock. In contrast, in order to prevent excessive inventory, the necessary inventory standard is the maximum inventory. It is necessary to monitor inventory status with these two standards.
1. Use days as the unit for calculating inventory
Individual control of excessive quantities of materials can prevent excess or shortage of inventory. There are two methods. One method is to calculate by actual numbers, and the other method is to calculate by days. You can also combine these two methods. To individually control inventory materials, it is necessary to understand the method of calculating inventory in days.
The indicators of this method are inventory circulation rate and inventory circulation period. Divide the outgoing amount by the inventory amount, and the value obtained is the inventory circulation rate, which is expressed in times. When the cycle rate is higher, the inventory decreases and the conversion into cash is faster.
The inventory cycle days in the inventory cycle cycle are 365 days divided by the inventory cycle rate. This number of days refers to the number of days required from the start of purchase to the point of sale, so this number represents inventory.
In short, to control inventory, it will be easier to understand by using "a few days of inventory", that is, using days to express the current inventory. Therefore, using the number of days to express the small quantity and the maximum inventory quantity is set based on the inventory basis of "the average daily outbound quantity is several days".
2. Calculate the minimum inventory
There are two ways to set the minimum inventory:
(1) Set during the order and delivery interval.
(2) Reflect the variation range of the average outbound volume.
Generally, the calculation of minimum inventory is based on the interval between ordering and delivery. The order and delivery interval is the number of days required from the time the order is placed to the delivery. If the order and delivery interval is seven days, then the basic minimum inventory is six days. To be on the safe side, one day will be missed here, so do not set the minimum inventory too large. It is more practical to set it within the range of the order and delivery interval.
Minimum inventory (basic days) = order and delivery interval (days)-1 day.
Ordering and delivery intervals will vary depending on the industry, so the interval in the circulation industry will be shorter than that in the manufacturing industry, and generally will be negotiated with customers in advance.
However, there is no fixed number for the average daily outbound volume. In the case of irregular distribution, it is necessary to consider the magnitude of the change to find the minimum inventory.
Minimum inventory (number of days) = minimum inventory (basic number of days) + (average maximum out-of-warehouse quantity per day-average out-of-warehouse quantity per day/average daily outage quantity)
According to this method, when the maximum inventory for a day is larger, that is, the greater the difference between the maximum inventory and the average daily outbound amount, the minimum inventory must be added.
Therefore, even if there is a sudden large number of orders, it can be dealt with to a certain extent. This is a more practical way to determine the minimum inventory.
3. Calculate the maximum inventory
The calculation formula for the maximum inventory quantity is twice the average inventory quantity minus the minimum inventory quantity, and the obtained value is related to the average inventory quantity and the minimum inventory quantity. The part where the minimum inventory is calculated in days has already been explained, here is the calculation method of the average inventory.
The average inventory is divided into the beginning and end averages, the average of the total of 12 months, etc., and the figures obtained are also different. In short, using different average inventory levels will result in different levels of management.
The above is the place to pay attention to inventory management. Inventory management is one of the most critical elements in warehouse management. It must be managed regularly and planned reasonably.
