Briefly describe the functions and disadvantages of inventory

Functions of inventory: adjusting the contradiction between supply and demand, safety reserve, reduce logistics costs. The disadvantages of inventory are: occupy a large amount of funds, increase the cost of goods and management costs, cover up the problems of the enterprise.

A function

1, regulating supply and demand

Different products, their production and consumption are different, some products are more concentrated production, but consumption is balanced, such as grapes and other seasonal growth of fruit, all year round is a balanced consumption; some products are produced in a balanced manner, but consumption is not balanced, such as down jackets and other products all year round is balanced. Some products are produced in a balanced manner, but consumption is not balanced, such as down jackets, which are produced throughout the year, but consumption is concentrated in winter.

2, safety reserves

Enterprise requirements for safety reserves from future sales and inventory replenishment uncertainty, as long as there is uncertainty, it is necessary to maintain inventory status.

3, reduce logistics costs

For manufacturers, maintain a reasonable inventory of raw materials and finished goods, you can eliminate or avoid the need for emergency orders due to the upstream raw material supply is not timely increase in logistics costs, but also to eliminate or avoid the downstream sellers due to fluctuations in sales and the temporary ordering of increased logistics costs.

Two, the disadvantages

1, occupy a large amount of funds: improper inventory management will form a large amount of capital deposits.

2, increase the cost of goods and management costs: the increase in the cost of inventory materials directly increase the cost of goods, and related inventory equipment, management personnel also increased the management costs.

3, cover up the problems of the enterprise: such as poor planning, poor procurement, uneven production: unstable quality of goods and market sales, workers are not skilled.

Methods of inventory management

1, categorization and hierarchical control method: this method is mainly on the traditional inventory management, in the specific operation of the process of the first to carry out a unified allocation of inventory funds and scheduling, and then do a good job of budget management. At the same time, attention should also be paid to the management of funds and the use of funds for the effective integration of funds management and materials management in principle, the funds are allocated to specific departments for management.

2, ABC control method: this is also a more important method of inventory management, in principle, mainly to follow the key to ensure that the care of the general, in the specific application of the process should be combined with the actual situation to make effective choices.

3, just-in-time inventory management: this management method is more focused on the production of products really needed, in accordance with the required amount of production, but also to grasp the exact time, the use of effective ways to reduce inventory costs, help better enhance profits.