What's wrong with traditional inventory management?

With the rapid development of information technology, enterprises are facing such a contradiction. On the one hand, the goal of any enterprise is to maximize profits, hope that funds will flow as soon as possible, and do not want to have any form of inventory; On the other hand, it is necessary to ensure the continuity and continuity of production, ensure the stability of production supply and demand as much as possible, and not be affected by external fluctuations. The essence of inventory management is the problems brought by inventory itself. This is because the inventory itself has the following defects: the inventory occupies a lot of money, which increases the product cost and management cost of the enterprise. The cost of inventory materials directly increases the cost of products, while the increase of related inventory equipment and management personnel also increases the management cost of enterprises, covering up many management problems of enterprises, such as poor planning, unfavorable procurement, unbalanced production, unstable product quality and unfavorable market sales. The problems existing in inventory management are:

1. Simplification of inventory control strategy. Nowadays, there are more and more kinds of materials used in enterprise production. At present, the unified inventory management (www.chinatpm.net) strategy is adopted for goods, and the classification of goods cannot reflect the stability of actual demand. In fact, this is a dynamic and uncertain demand. The demand of some projects is easier to predict, while the demand of some projects is not easy to predict. Inventory control strategy should reflect the uncertainty of supply and demand.

2. Without considering the influence of uncertain factors on inventory, the information transmission efficiency is low. The uncertain factors in the production process mainly include: first, the uncertainty of demand. Under the influence of many factors, demand may be uncertain. For example, the sudden increase in demand caused by sudden hot sales will restrict control. Second, the order cycle. Due to natural and man-made reasons, uncertain ordering cycle will restrict inventory control. Third, traffic. The instability and uncertainty of transportation will inevitably restrict inventory control. Fourth, financial constraints. Lack of funds and ineffective capital flow will invalidate the expected control means, so it is also a restrictive factor. Fifth. The restriction of management level. If the management level can't meet the control requirements, it will be impossible to achieve control. Sixth. Price and cost restrictions, etc. Serious uncertainty often affects the inventory and even the normal operation of enterprise production.

3. Large inventory waste. Mainly manifested in: (1), the inventory holding cost is high; (2), ordering or production preparation costs; (3) the increase of out-of-stock cost; (4) Waste of inventory cost in transit. Due to improper planning and inventory, on the one hand, it increases inventory costs, on the other hand, it seriously affects normal production.