What costs does inventory cost generally include?

Inventory cost refers to the cost of goods stored in the warehouse, which also includes ordering fee, purchase fee and storage fee.

Inventory cost is the total cost in the whole inventory process. Where: (1) order cost. (2) the purchase cost, that is, the cost of purchasing or producing the product, is related to the purchase volume or production volume. (3) Inventory holding cost refers to the cost incurred for maintaining inventory, which usually refers to the cost incurred from warehousing to warehousing. (4) Shortage cost. (5) Logistics cost, that is, the cost of transporting goods from suppliers to warehouses and from warehouses to users, can also be merged into the above (1) and (2).

The composition of inventory cost can generally be divided into the following three main parts:

Inventory holding cost

Inventory holding cost is the cost of maintaining and managing inventory. It can be divided into three aspects: operating cost, opportunity cost and risk cost. Operating costs mainly include storage costs. Self-operated warehouse is embodied in the amortization expense of fixed investment in warehouse construction, and outsourced warehouse is embodied in warehouse rent. The higher the inventory, the larger the storage area and the higher the storage cost. In addition, operating costs include equipment investment costs and daily operating expenses (water, electricity, labor, etc.). ) In the warehouse. Opportunity cost is mainly the opportunity cost brought by the occupation of funds by inventory. As an asset of an enterprise, inventory is obtained by occupying the working capital of the enterprise. Any enterprise has its own certain rate of return on capital investment, that is, the average income that can be obtained by using the funds occupied by inventory for other investments instead of inventory. This ratio varies from industry to enterprise, generally ranging from 65,438+00% to 65,438+06%.

The opportunity cost of inventory is the loss of investment income caused by working capital because enterprises want to hold a certain amount of inventory. Sometimes an enterprise obtains inventory through borrowing, and the opportunity cost at this time should also include the interest expense of borrowing. As the name implies, risk cost is considered from the perspective of risk. The first is the insurance cost. In order to reduce the loss of inventory, most enterprises will take out safety insurance for their own inventory, and the cost is the cost of inventory. At the same time, enterprises may also lose or scrap due to unreasonable storage of inventory, such as expired food, damage during storage, unsalable products, theft and so on. These losses are also the risk cost of inventory.

Inventory purchase cost

The acquisition cost of inventory refers to the expenses that enterprises have to bear in order to acquire inventory. Aside from the value of the inventory itself, if the inventory is directly acquired by the enterprise through procurement, the acquisition cost is reflected in the order cost, including the communication cost with suppliers and the transportation cost of goods. The more times of ordering or transportation, the higher the ordering cost; If the inventory is produced by the enterprise itself, the purchase cost is reflected in the production preparation cost, that is, the cost of producing a batch of goods and changing the production line.

Inventory shortage cost

The cost of inventory shortage is simply the loss caused by the interruption of inventory supply. Including the loss of production stoppage caused by the interruption of raw material supply, the loss of delayed delivery and the loss of sales opportunities caused by insufficient inventory of finished products, and the urgent extra procurement expenses borne by enterprises to solve the emergency procurement interruption inventory.

Reduce inventory cost

In the process of enterprise management, it is absolutely impossible to reduce the inventory cost only by a certain department, but a collaborative process, and reducing the inventory cycle and inventory quantity is the key. If you want to separate from the warehouse, there are probably the following methods:

1, three-dimensional space utilization

2. Turn the production process inventory into handover.

3. Purchase goods within a time limit.

4. Smooth layout

5. Increase/decrease necessary/unnecessary equipment and facilities

6. Introduce erp.

Control inventory cost

meaning

One of the important contents of enterprise management is to consider how to increase revenue and reduce expenditure for enterprises. As the profit center of the enterprise, the sales department plays an important role in the enterprise's open source, and the logistics department is equally important in reducing the enterprise's cost. Good logistics management can increase inventory turnover times, speed up capital turnover, reduce operating costs and improve customer service level, thus saving enterprise costs and increasing profits.

Generally speaking, the management of enterprise logistics includes the following aspects: customer service, inventory control, procurement management, warehousing management and transportation control. More and more enterprises begin to attach importance to and emphasize the management mode of integrated logistics, that is, by reasonably managing the operation of each directly affiliated department, properly formulating and adjusting the performance indicators of each department to achieve the overall performance standards.

Specific measures

Inventory cost control can be carried out from the following aspects:

1) Determine the inventory materials correctly:

For ordinary enterprises, the products they operate range from dozens to thousands. In most cases, it is not necessary and impossible to prepare inventory for all products. Therefore, the primary task of an enterprise is to correctly determine the inventory and non-inventory materials.

Generally speaking, the inventory management mode of enterprises can be divided into pull (reactive) and push (planned). The former is an inventory management model based on demand (production or customer order), which only produces or purchases when necessary. Both JIT and Kanban management system belong to this mode.

2) Reduce useless inventory:

Although inventory must exist in many cases, not all inventory can play a role at any time to meet the needs of production or delivery, or these inventories can not be used for a certain period of time. An important aspect of reducing inventory cost is to reduce the number of these unusable inventories as much as possible. For enterprises, in-transit inventory, unsalable inventory, reserve inventory (deliverable orders cannot be delivered for other reasons), work in process or goods to be inspected are all unavailable inventory. One of the goals of inventory management is to improve the ratio of available inventory to total inventory.

In practical work, useless inventory is usually reduced by the following methods:

1. Inventory in transit. Shorten delivery and transportation time: shorten the transportation time from suppliers to enterprises as much as possible. First of all, we should choose the appropriate mode of transportation according to the characteristics of the product (price, volume, weight, etc.). ). The management of this time will greatly affect the enterprise's in-transit inventory. Generally speaking, products with high price, small size and light weight will give priority to air transportation, and sea transportation is a common mode of transportation. However, it is necessary to carefully compare the impact of shortening transportation time on inventory and even inventory cost and the impact of transportation cost, and choose the appropriate transportation mode, otherwise the overall optimization will not be achieved. Choosing appropriate delivery and payment methods is also an important aspect to reduce inventory costs, especially in international procurement. It takes a long time and a long distance for the goods to leave the supplier's factory and actually arrive at the enterprise warehouse. In this process, the later the ownership of the goods is handed over to the enterprise, the longer the payment cycle, and the smaller the risks and expenses that the enterprise needs to bear. Choosing the right location and the distance from suppliers or customers will affect the inventory level. The shorter the distance, the shorter the delivery time and the lower the inventory. This is why GM suppliers will move their factories to Shanghai one after another with the establishment of factories in Shanghai, in order to speed up the delivery time and reduce the inventory.

2. Reserve inventory. Control the batch delivery of orders: Batch delivery of orders can greatly reduce the inventory level of customers, but it also puts a lot of pressure on suppliers. Therefore, enterprises must strictly control such orders, and only when it is really needed can they provide customers with communication between the sales department, the financial department and customers, so as to eliminate the reserved inventory caused by payment, customer project delay and other reasons. 3. Dull inventory. Reduce the production of sluggish inventory through appropriate business policies.

By optimizing the production line management, making a reasonable production rhythm, and shortening the cargo transportation route during the processing of characteristic products, the inventory of products in process can be reduced, and the inventory of products to be inspected can be reduced by speeding up product testing.