What is the ABC method of inventory management?

Based on the importance of inventory, it is divided into three types of ABC.

Type A inventory varieties account for 10% to 15% of all inventory, funds account for about 80% of the total inventory, the implementation of key management, such as large spare parts.

Type B inventory is general inventory, varieties accounted for 20% to 30% of all inventory, funds accounted for about 15% of the total inventory, appropriate control, the implementation of day-to-day management, such as daily production and consumption of materials.

Type C inventory varieties accounted for 60% ~ 65% of all inventory, funds accounted for about 5% of the total inventory, general management, such as office supplies, labor supplies, etc. at any time can be purchased.

After classification through the ABC, seize the key inventory, control the general inventory, develop a more reasonable inventory procurement plan, so as to effectively control the inventory stock, reduce the reserve fund occupation, accelerate the turnover of funds

Expanded

In order to make the total cost of inventory minimal, there are the following kinds of inventory management techniques

1, ABC method: according to the value of the inventory to be classified, usually the value of the most expensive class A inventory, the most stringent management, and then in the order of B, C and so on.

2, JIT method: Just-in-Time (JIT) production system to maintain inventory at the lowest level.

3, EOQ method: economic ordering quantity, in consideration of the ordering cost and holding cost, in order to minimize the cost of inventory.

4, MRP method: Material Requirements Planning, information systems to manage inventory ordering and control

Current enterprise inventory management problems and reasons

1, inventory revenue, issue, balance of the lack of real records.

Material consumption records production costs and expenses of the collection and carry-over of the records of the more artificial factors, especially in the project accounting more apparent its shortcomings. For example, A, B two work at the same time, the end of the month accounting records show that the material consumption of work number B is very little or even zero, while the material consumption of work number A more than a large piece;

Raw and auxiliary materials have been used to consume, but in fact did not have the corresponding cost of carry-over; raw and auxiliary materials have not been used to consume, but in fact, has been carried forward to the cost of the material purchased has been used to consume, purchase invoices have not yet arrived, and not according to the required provisional estimate into storage. And not in accordance with the provisions of the provisional valuation of the inventory, resulting in the balance sheet at the end of the inventory record is reduced or even a red-letter balance.

2, the internal control system is not sound.

In the procurement of materials, product sales often by the same person to complete the whole process of purchasing and sales, payment and collection, warehousing, etc., so that the procurement and sales work is not in accordance with the rules and regulations, but also to provide a hotbed of underhanded operations, increasing the possibility of fraud.

3, high liquidity occupancy.

Because of the large inventory, resulting in high working capital occupancy, some enterprises to account for inventory reserves to more than 60% of the total working capital, to the enterprise liquidity turnover has brought great difficulties.

4, non-normal inventory reserves crowded out the normal inventory reserves.

In order to control the amount of working capital occupied in the daily inventory management to minimize the amount of inventory, reduce the amount of goods, thus affecting the normal production and operation of the reasonable amount of inventory reserves required.

5, management is not in place.

Destruction to be scrapped, overstocked backlog inventory reserves in the annual inventory audit should be reported as a key issue, but every year is only reported, there is no higher authority's instructions, there is no processing results, resulting in the destruction of the inventory to be scrapped, overstocked backlog inventory reserves as a snowball, the bigger the bigger, not to solve the problem from the ground up.

Baidu Encyclopedia - Inventory Management