http://www.maniacsolutions.com/digital-marketing-solutions-florida/
INVENTORY MANAGEMENT
I INVENTORY MANAGEMENT
1. INTRODUCTION
Defination AND MEANING
The inventory is a list of products and materials, or goods and the materials themselves, are made available on the action of a company. Inventory is carried out in order to manage customer and hide the fact that manufacture / supply delay is longer than delivery delay, and also to relieve the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials.
The reasons for keeping stock
All these stock reasons can apply to any owner or product stage.
buffer stock is held in individual work stations against the possibility that the workstation can be a little upward delay in providing the next item for processing. While some security stocks processes, lead to very large, Toyota moved to one (or some articles) and has now moved to eliminate this type of action.
Safety stock is held against the process or machine failure with the hope / belief that failure can be repaired before the stock is depleted. Such actions may be removed by programs such as Total Productive Maintenance
Overproduction is held because the forecast and actual sales do not match. Make the order and JIT eliminates this type of action.
delay consignment stock is carried out as part of the process is designed to operate at the same time a batch processing only individual items. Therefore each point of the lot must wait until the entire batch to be processed before moving on to the next workstation. This can be eliminated by a single piece of work or a lot size of one.
Demand fluctuation of securities held in the production capacity is unable to flex the demand. Therefore action is built in the era of less use to be supplied to customers when demand exceeds production capacity. This can be eliminated by increased flexibility and the ability of a production line or reduced through the transfer of load balancing level.
Action Line balance maintained by different sub-processes in a line of work at different rates. Therefore accumulate stocks after a quick sub process or before a large much sub-process. line balancing is to eliminate this type of action.
Value change is carried out after a sub-process which has a configuration of time or changes over time. This material is used, while the change-over is happening. This stock can be eliminated using tools such as SMED.
When these populations contain the same or similar practice is often work to keep all these stocks mixed before or after the sub-process to which they relate. This "reduces" costs. Because they are confused together, there is no visual reminder to operators of the adjacent sub-processes or execution of actions is due to a particular cause and should be the responsibility of an individual in particular, with the inevitable consequences. Some plants are operating centralized securities through sub-processes which makes the situation even worse.
The basis of inventory accounting
Inventory should be noted that it is held across borders and generally accounting period costs should be compared with the results of that expense in the term. When processes are simple and short, then inventories were smaller but more complex processes, then grew larger inventories and important elements valued in the balance. This need to assess and incomplete unsold goods has led to many new behaviors in management practices. Perhaps the most significant of these are the complexities of the recovery of fixed costs, transfer pricing, and the separation of direct overheads. This supposedly excluded "income forecast" or "declaring dividends of capital." It is one of the intangible benefits of Lean and TPS to shorten processing times and reduced stock levels to the point where it is greatly reduced importance of this activity and much effort, especially management, to making can be minimized.
V LIFO / FIFO S
When a dealer sells goods from inventory, the inventory value is reduced in the cost of goods sold (COGS sold). This is simple, where the COG has not changed over those held in the action, provided that an agreed method then should be derived. For commodity items that you can not track individually, accountants must choose a method that suits the nature of the sale. Two popular methods exist: FIFO and LIFO accounting (first in – first, last – first). FIFO refers to the first unit that arrived in the inventory the first sale. LIFO considers the last unit to arrive in the inventory as the first sale. What method selects a counter can have a significant effect on net income and book value and, in turn, on taxation. Using LIFO accounting for inventory, a company generally reports lower net income and lower book value due to the effects of inflation. This results in lower taxation. Because of the potential to skew LIFO inventory value, GAAP and IAS United Kingdom effectively banned LIFO inventory accounting.
Supply Chain Management
A supply chain is a network of facilities and options distribution that performs the functions of procurement of materials, processing of these materials into intermediate and finished products, and distribution of these products finished to customers. The existing supply chains in service organizations and manufacturing, although the complexity of the chain may vary greatly from one industry to another and one company to another.
management of the supply chain is typically be between fully vertically integrated companies, which is owned by the entire flow materials by a single firm and those in which each channel member operates independently. Therefore coordination between the different actors in the chain is key to their efficient management. Cooper and [Ellram 1993] compares the management of the supply chain on a relay team practiced well balanced. This team is more competitive when each player knows how to register for the hand-off. The relationships are strongest between players who directly pass the baton (stick), but the whole team should make an effort coordinated to win the race.
Below is an example of a simple supply chain for a unique product which takes the raw material vendors, transformed into finished products in one step, and then transported to distribution centers, and ultimately customers. Realistic supply chains have various end products with shared components, facilities and capabilities. The material flow is not always along an arborescent network, various modes of transport can be considered, and the list of materials for the final elements can be both deep and large.
To simplify the concept, supply chain management can be defined as a loop: it starts with the customer and ends with the customer. All materials, finished products, information, and even the entire transaction flow through the loop. However, managing the supply chain can be a very difficult task because in reality, the supply chain is a complex and dynamic network of facilities and organizations with different and contradictory objectives.
The existing supply chains in service organizations and manufacturing, despite the complexity of the chain can vary widely from one industry to another and from one company to another.
Unlike manufacturing commercial supplies, services such as planning supplies Clinical trials are very dynamic and can often have last minute changes. The availability of kit the patient when the patient arrives at the center of research is very important for successful clinical trial. This results in the overproduction of pharmaceuticals to take care of last minute changes in demand. manufacturing R & D is very expensive and the overproduction of patients kits adds a significant cost to the total cost of clinical trials. An integrated supply chain can reduce overproduction of pharmaceutical products by efficient demand management, planning and inventory management.
Traditionally, marketing, distribution, planning, manufacturing, and purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often contradictory. marketing objective of high customer service and maximum sales dollars conflict manufacturing and distribution goals. Many manufacturing operations are designed to maximize performance and reduce costs with little regard for the impact on inventory levels and capacity distribution. purchase contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is no plan single, integrated for the organization — there were as many plans as businesses. Clearly, there is a need for a mechanism by which these different functions can be integrated together. Supply Chain Management is a strategy through which such integration can be achieved.
Supply Chain Management (SCM) is the process of planning, implementation and monitoring of the operations of the supply chain to meet customer requirements as efficiently as possible. Supply management extends chain of all movement and storage of raw materials, inventory of goods in process and finished goods from point of origin to point of consumption.
According Professional Council of Supply Chain Management (CSCMP)
A trade association has developed a definition in 2004, Supply Chain Management "comprises planning and management of all activities involved in sourcing and procurement, processing, and all logistics management activities. " Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates the management of supply and demand within and across enterprises.
According to Cohen & Lee (1988)
Supply Chain Management is "The network of organizations that are having linkages, both upstream and downstream, in different processes and activities that produce and distribute value in the form of products and services to the consumer. "Thus, a shirt manufacturer is a part of the supply chain extending to the stream through the tissues of the fabrics to the spinners and fiber producers, and downstream through distributors and retailers to consumers final. Although each of these organizations are dependent on each other but do not traditionally cooperate closely. An integrated approach to more efficient supply chain management processes and increase profitability by offering the right product at the right place at the right time and at the lowest possible cost.
According Ganeshan & Harrison (2001)
Supply Chain Management is a "systems approach to managing the entire flow of information, materials, and services raw material suppliers through factories and warehouses to the end customer. "
The supply chain event management (abbreviated as SCEM) is a consideration of all events that may occur and the factors that may cause an interruption in the supply chain. With SCEM possible scenarios can be create and solutions can be envisaged.
Some experts distinguish the management of the supply chain and logistics management, while others consider the terms are interchangeable. From the point of view of a company, the scope of the management of the supply chain is usually limited to supply-side providers provider and client side for clients of his client.
management of the supply chain is also a category of software products.
2. SIEMENS
SIEMENS is one of the world's largest companies and Europe's largest engineering firm. Siemens has six divisions main business: Communication and Information, Automation and Control, Energy, transport, medical and lighting. Siemens' international headquarters are in Berlin and Munich. Siemens AG is listed on the Frankfurt Stock Exchange and has been listed on the New York Stock Exchange since March 12, 2001. Worldwide, Siemens and its subsidiaries employ 480,000 people in 190 countries and reported global sales of € 87,325,000,000 in fiscal year 2006
HISTORY
Siemens was founded by Werner von Siemens, the October 1, 1847, alleging that he had invented the telegraph used a needle to point to the sequence of letters, instead of using Morse code. The company – then called the Telegraph-Bauanstalt von Siemens & Halske – opened its first workshop on 12 October.
In 1848, the company built the first long-distance telegraph line in Europe, 500 km from Berlin to Frankfurt am Main. In 1850 the founder of young brother, Sir William Siemens (born Carl Wilhelm Siemens), started to represent the company in London. In the 1850s, the company has participated in building long distance networks telegraph in Russia. In 1855, a branch of the company run by another brother, Carl von Siemens, opened in St. Petersburg. In 1867, Siemens completed the line monumental Indo-European (Calcutta to London) telegraph.
In 1881, a Siemens AC Alternator driven by a water mill is used to feed the world lighting of the first electric street in the town of Godalming, United Kingdom. The company continued to grow and diversified into electric trains and light bulbs. In 1890, the founder retired and left the company with his brother Carl and sons Arnold and Wilhelm. Siemens & Halske (S & H) incorporated in 1897.
In 1919, S & H and two joint venture companies formed the Osram lightbulb. A Japanese subsidiary was established in 1923.
During the 1920s and 1930s, S & H started to manufacture radios, televisions, and electron microscopes.
Before World War II Siemens has participated in the secret rearmament Germany. During the Second World War, like most large companies in Germany at the time, Siemens supported the Hitler regime, contributed to the war effort and participated in the "Nazification" of the economy. Siemens had many factories in and around the camps known as Auschwitz and used hand slave labor from concentration camps to build electric switches for military uses. In one example, almost 100,000 men and women from Auschwitz worked in a factory Siemens in the interior of the extermination camp, the supply of electricity to the camp.
In the 1950s and from his new base in Bavaria, started S & H to manufacture computers, semiconductor devices, laundry machines, and pacemakers. Siemens AG was founded in 1966. The first digital telephone company was in 1980. In 1988 Siemens and GEC acquired the UK defense and technology company Plessey. holdings were divided Plessey, and Siemens took over the avionics, radar and traffic control companies – like Siemens Plessey.
In 1991, Siemens acquired Nixdorf Computer AG and renamed it Siemens Nixdorf Informationssysteme AG. In 1997 Siemens introduced the first GSM mobile phone with a color screen. Also in 1997, Siemens agreed to sell the defense arm of Siemens Plessey to British Aerospace (BAe) and a government agency of the United Kingdom, the Defence Analytical Services Agency (DASA). BAe and DASA acquired the British and German divisions of the operation, respectively.
In 1999, Siemens' semiconductor operations were spun off into a new company known as Infineon Technologies. In addition, Siemens Nixdorf Informationssysteme AG is part of Fujitsu Siemens AG in that year. The retail banking group became Wincor Nixdorf technology.
In February 2003, Siemens reopened its office in Kabul. [3]
In 2004, Siemens was responsible for the official Formula One timekeeper, replacing TAG Heuer.
In November 2005, Siemens signed a 12 year agreement with the Walt Disney company to sponsor park attractions in Florida and California.
In 2006, Siemens announced the acquisition of Bayer Diagnostics, who joined the Medical Solutions Diagnostics division officially on January 1, 2007.
In March 2007, a board member of Siemens was temporarily arrested and accused of illegally financing a labor association favorable to the company that competes against the union IG Metall. He has been released on bail. Union offices and Siemens have been searched. Siemens denies the allegations.
In April 2007, fixed networks, networks mobile and Carrier Services divisions of Siemens merged with Network Business Group of Nokia in a 50/50 joint venture, the creation of a telephone company fixed and mobile called Nokia Siemens Networks. Nokia delayed the merger due to the corruption investigations against Siemens.
Through an American sub organization known as the Siemens Foundation, Siemens also devotes funds to reward students and teachers of AP. One of its main programs is the Siemens Competition Westinghouse in math, science and technology, which annually awards grants of up to $ 100,000 for individual and team participants. According to the foundation website, Siemens awards a total of about U.S. $ 2 million in scholarship money each year.
SIEMENS MAIN CLIENTS
-KCR
-Novartis
"Edmonton Transit System
-Calgary Transit
"Deutsche Bahn AG (German railway company)
-METRORail (Houston, Texas)
District Sacramento Regional Transit
TheRide-Regional Transportation District (Denver, Colorado)
-LACMTA (Los Angeles County, California)
-Pittsburgh Light Rail
San Diego Trolley
-MAX Light Rail (Portland, Oregon)
"Nederlandse Spoorwegen (Dutch railways) (Netherlands)
-Port of Rotterdam (Rotterdam, Netherlands)
Muh-Balkim. Elk. Ltd. Sti.
-BBC
Railways and India
-Airtel
"Powergrid Corporation of India
Products
Industrial Instrumentation (Sensors & Controls)
-Services Platform for Telecommunications, TSP 7000
-Combine, ULF and Avanto trams
U2-Siemens LRV Duwag
-ER20 locomotive – MTR
March -LHB/Siemens M1/M2/M3 Metro Par
Siemens-Adtranz LRV
1435 -Duewag/Siemens combine low Flr LRV
Metro-MX3000 Car for Oslo (SGP Wien works)
Metro-S4000
ABB -Schindler/Siemens Be 4 / 8 Ground Floor LRV
5001-Meter
NGT 6D LRV-SWBSiemensr
Locomotive-Eurosprinter
-Desiro, ICE, and Transrapid trains
-Gigaset, home entertainment products, Gigaset M740 AV included, a decoder for receiving DTT, and integrate it into a home network (WLAN or cable), ie for home streaming media.
-Hicom E Commerce
-Hicom 300
"HiPath
"HiQ 8000 Softswitch
-MSR32R
"EWSD telephone exchanges
SPX-2000 small digital telephone exchange (Rural)
Siemens Gigaset cordless phones
Siemens Mobile Phones – divested to BenQ in 2005
APS-T2000-Siemens Control System (formerly TELEPERM XP)
APS-Siemens-T3000 Control System (electrical power generation Control)
"SIMATIC PCS 7 Process Automation System for the process and the hybrid industries
-Radio and commodities for 2G and 3G Mobile Networks (GSM, UMTS, …)
-Gas and Steam Turbines
Industrial programmable controls (Including Simatic PLC, and the logo! Microcontrollers)
"Life Siemens Servo ventilator support line
"MAGNETOM (TM) Espree
-Somatom (R) Definition CT
-Somatom (R) Sensation CT
-Somatom (R) Emotion CT
AXIOM Artis-
"AXIOM Sensis
Signature Series Gamma Camera-E.Cam
-Symbian TRuepoint SPECT-CT
TRuepoint PET.CT-Biograph
"Magnetom C!, A low-field open MRI
"Magnetom Avanto, a Tim system MRI
"Magnetom Espree, Tim system, open MRI was
"Magnetom Trio, A Tim System, an ultra high field MRI
1.3-MW wind turbines, 2.3 MW, 3.6 MW
-Sinorix (TM)
-SISTORE (TM)
Main competitors of Siemens are:
-ABB
-Alcatel-Lucent
-Alstom
Logic-automated
Bombardier
-Cisco Systems
-Computrols
-Eaton
-Ericsson
General Electric
-Honeywell
Johnson Controls-
"Lantronix
-Nortel
-Philips
Reliable Controls-
-Rockwell Automation
-Samsung
-Schneider Electric
3. OBJECTIVES AND THE NEED FOR MANAGEMENT OF THE SUPPLY CHAIN
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often contradictory.
marketing objective of high customer service and maximum sales dollars conflict manufacturing and distribution goals. Many of the manufacturing operations are designed to maximize performance and lower costs with little regard for the impact on inventory levels and distribution capabilities. contracts purchase are often negotiated with very little information beyond historical buying patterns.
The result of these factors is that there is a single, integrated plan for the organization — there were as many plans as businesses. Clearly there is a need for a mechanism through which these different functions can be integrated together. Supply Chain Management is a strategy through which such integration can be achieved.
In addition, shortened product life cycles, increased competition and higher expectations customers have forced many leading edge companies to move from physical logistic management towards a more advanced supply chain. Moreover, in recent years it has become clear that many companies have reduced their manufacturing costs as much as practically possible. Therefore, in many cases, the only way possible to further reduce costs and delivery times is an effective management of the supply chain.
Besides reducing costs, supply chain management approach also provides customer service improvements. Allows management of:
– Inventories
– Transport Systems and
– Distribution networks throughout
for organizations are able to meet or exceed customer expectations.
The main objective management of the supply chain to reduce or eliminate inventory buffers between the origination in the chain through the exchange of information on demand and current stock levels.
Overall, an organization needs an efficient chain management system and adequate supply for the following strategic and competitive areas can be used to their advantage, if a supply chain management system is applied correctly.
1. Fulfillment commodity:
Ensuring the right quantity of parts for production or products for sale comes at the right time. It is possible through effective communication, ensuring that orders are placed with the appropriate amount of time available to be filled. The supply chain management system also allows a company to constantly see what is in stock and ensure that the correct quantities are ordered to replace values.
2. Logistics:
The cost of transporting materials as low as possible, consistent with safe and reliable delivery. Here chain management delivery system enables a company to have constant contact with your sales team, which could include trucks, trains or other means of transport. The system may allow the company to track where the necessary materials are at all times. It can also be profitable to share transportation costs with a partner company if shipments are not large enough to fill an entire truck and this again allows the company to make this decision.
3. Smooth production:
Ensuring production lines function smoothly because high quality parts are available when needed. Production can run smoothly as a result of the implementation and logistics being correctly applied. If the amount is not correct order and delivered in the time requested, production stopped, but having an effective chain management system in place supply will ensure that production can always run smoothly without delays due to orders and transportation.
4. Increasing income and benefits:
Ensure that is not lost because sales of the shelves are empty. Management of supply chain improvements the company flexibility to respond to unexpected changes in demand and supply. Due to this company has the capacity to produce goods at lower prices and distribute them to consumers faster then companies without chain management supply both increase the overall profit.
5. Cost reduction:
Keeping the cost of parts and products purchased at acceptable levels. Managing the supply chain reduces costs by increasing inventory turnover in the workshop and store quality control of products thus reducing the cost of internal and external failures and working with suppliers to produce the most cost efficient manufacturing.
6. The mutual success:
Partners in the supply chain ensures mutual success. Collaborative planning, forecasting and replenishment (CPFR) is a long-term commitment, working together on quality, and support by the buyer, supplier management, technological, and capacity development. This ratio allows the company to have access to updated information, reliable, obtain lower inventory levels, reduce delivery times, improve product quality, improve forecast accuracy and, ultimately, improve customer service and total benefits. Providers also benefit from the relationship Buyer entry of cooperation increased from suggestions to improve the quality and costs and savings though shared. Consumers can also benefit through high quality goods at a lower cost.
4. ACTIVITIES / FUNCTIONS OF SIEMENS IN SCM
Supply Chain Management is a multidisciplinary approach to manage the movement of raw materials into an organization and movement of finished goods from the organization to the final consumer. As companies strive to focus on core competencies and be more flexible, they have reduced their ownership of sources of raw materials and distribution channels. These functions are increasingly outsourced to other companies that can perform the activities better or more cost effectively. The effect has been to increase the number of companies involved in satisfying consumer demand, while reducing management control of daily logistics operations. Less control and more partners in the supply chain led to the creation of concepts of supply chain management. The purpose of managing the supply chain is to improve trust and collaboration between partners in the supply chain, thus improving inventory visibility and improving inventory velocity.
Various models have been proposed for understanding management activities necessary material flows across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Council supply chain. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). the activities of the supply chain can be grouped into strategic, tactical and operational activities.
(A) Strategic: –
"Strategic network optimization, including the number, location and size of warehouses, distribution centers and facilities.
"Strategic partnership with suppliers, distributors and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third party logistics.
"Product design coordination, so that new and existing products can be optimally integrated in the supply chain.
-Technology Information infrastructure to support the operations of the supply chain.
"Where do and what to do or buy decisions.
(B) Tactics: –
-Sourcing contracts and other purchasing decisions.
"The production decisions, including hiring, placement, programming, planning and process definition.
"Inventory decisions, including quantity, location and quality of inventory. transport strategy, including frequency, routes, and contracting.
-Benchmarking of all operations against competitors and the implementation of good practice across the company.
(C) of operation: -
Daily production and distribution planning, including all nodes supply chain.
"Production scheduling for each manufacturing plant in the supply chain (minute by minute).
"The demand for planning and forecasting, coordinating the demand forecast of all customers and the distribution of the forecast with all suppliers.
-Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Entry operations, including transportation providers and receipt of inventory.
"Production operations, including the consumption of materials and finished goods flow.
-Output operations including all fulfillment activities and transportation to customers.
-Order promising, accounting for all constraints in the supply chain, including all suppliers, factories, distribution centers, and other customers. Performance tracking of all activities.
Power Supply integrated CHAIN MANAGEMENT
An integrated approach to more efficient supply chain management processes and increase profitability by offering the right product at the right place at the right time and at the lowest possible cost. Unlike commercial supplies manufacturing, clinical supply planning is very dynamic and can often have last minute changes. The availability of kit the patient when the patient arrives at the center of research is very important to the success clinical trial.
This results in the overproduction of pharmaceuticals to take care of last minute changes in demand. R & Manufacturing D is very expensive and the overproduction of patient kits adds a significant cost to the total cost of clinical trials.
An integrated supply chain can reduce overproduction of pharmaceuticals efficient demand management, planning, and inventory management. Implementation of a system ERP (and SAP) in R & D can have a significant return on investment by efficient supply and inventory management system and also by reducing overproduction.
"How The integration is achieved in the supply chain?
Step 1:
complete functional independence in which each business function such as production or purchase does its own thing in complete isolation from the business function. For example, the function production seeking to optimize its unit cost of manufacture by production in the long run with regard to the accumulation of finished goods inventory and advancing the impact it will have on the storage and working capital.
Step 2:
Companies recognize the need for integration between adjacent limited functions such as distribution and inventory management and control or the purchase of material.
Stage 3:
A natural extension of the second phase, leading to the establishment and implementation of the integration of end to end. A concept of linking and coordination is achieved.
STEP 4:
The link made in the third phase extends to upstream suppliers and downstream customers. It represents the actual supply chain integration. This concept is also known as "co-managed inventory (CMI).
Force management of the supply chain is on trust and cooperation and the recognition that properly managed "all reed is greater than the sum of its parts. "
Inventory Decisions:
These refer to the means by which they manage inventories. Inventories exist at every stage of the supply chain as either raw materials, semi-processed or finished products. They may also be in progress between places. Its main purpose buffer against any uncertainty that might exist in the supply chain. Since the holding of inventories can cost between 20-40 percent of its value, its efficient management is critical in supply chain operations. Long term is that the main sets of management objectives. However, most researchers have approached the management of inventory in the short term perspective. These include deployment strategies (push pull front), the control policies — the determination of optimal levels of order quantities and replenishment points, and establishing safety stock levels, at each stocking location. These levels are critical, since they are the main determinants of the levels of customer service.
5. INVENTORY MANAGEMENT CONTROL
Inventory Database
An important component of inventory planning is access to an inventory database. It is a structured framework that contains the information necessary to effectively manage all inventory items, from materials ingredients to finished products. This information includes the classification and amount of inventories, demand for the items, cost to the company for each item, ordering costs, transportation costs and other data.
The task of inventory planning can be very complex. At the same time is based on fundamental principles. To do this we must understand and determine the optimal batch size should be asked. The EOQ (economic order quantity) refers to the optimal order size will lead to lower total order and transport costs and ordering costs. Calculating the economic order quantity for the company tries to determine the size of the order that minimize total inventory costs. In examining the two curves shows that the transport cost curve is more linear ie, inventory in any period, the higher the cost to dispose of it. Ordering cost curve is rather different. Ordering costs decreases with increasing size of orders. The point where the cost curve Storage is, the financing cost curve and the curve are ordering cost, represent the lowest total cost that is true, the economic order quantity or the optimal amount.
PRODUCTIVITY
In industries that one competitor will be a low cost producer and have higher sales volume in that sector. This is partly due to economies of scale, allowing fixed costs over a larger volume, but more specifically, for the purposes experience curve.
It is possible to identify and predict the improvements in the rate of production workers as they become more skilled in the processes and tasks in which they work. Bruce Henderson extended this concept by demonstrating that all costs, not only production costs would be reduced to a rate increase led volume. This cost reduction applies only to the value added, ie costs of purchasing other supplies. Traditionally it has been suggested that the main route cost reduction was to gain greater sales volume and there can be no doubt about the close relationship between the relative costs and relative market share. However, also must recognize that logistics management can provide a multitude of ways to increase efficiency and productivity and thus contribute significantly low unit costs.
In a more turbulent environment of today and there is no possibility of manufacturing and marketing acting independently of each other. It is widely accepted that the need to understand and meet customer needs is a prerequisite for survival. At the same time, seeking to improve cost competitiveness, management of manufacturing has been the subject of massive renaissance. The last decade has witnessed the rapid introduction of manufacturing systems flexible, new approaches to inventory based on materials requirements planning (MRP) and only time (JIT) methods, a sustained emphasis on quality.
Likewise there has been a growing recognition of the vital role it plays in the creation of procurement and sustaining competitive advantage as part of a process integrated logistics.
In this vein, logistics is therefore essentially an integrating concept that seeks to develop a comprehensive vision company. It is fundamentally a planning concept that seeks to create a framework in which the needs of the manufacturing strategy and plan, linking in turn into a strategy and a procurement plan.
Inventory Flow:
The logistics management has to do with the movement and storage of materials and finished products. logistics operations start with the initial shipment of a material or component part of a supplier and ends when a product is manufactured or processed is delivered to a client. From the initial purchase of a material or component, logistics value-added process. By moving the inventory when and where needed. Thus, the material gains value at each step. For a large manufacturer, logistics operations can consist of thousands of moves that will ultimately culminate in the delivery of the product an industrial user, wholesaler, distributor or customer. Similarly for retailers, and logistics operations may commence with the acquisition of products for resale and may end with the collection of consumers or labor.
The important point is that, regardless of size or type of business, logistics is useful and necessary attention to ongoing management.
related to inventory costs
Inventory carrying cost (ICC):
-Taxes
-Storage
-Capital
"Sure
-Obsolescence
-Ordering:
-Communication
-Processing, including material
-Handling and packaging
Update of activities, including
-Reception and processing of date-
The Basic inventory decisions
There are two basic decisions that must be made for every item that remains in inventory. These decisions have to do with the coordination of orders for the item and size of orders for the item.
RELEVANT Inventory costs
Item costs, maintenance costs, orders, shortage costs,
Direct costs for an item. Purchase costs for orders outside the manufacturing cost for domestic orders. The costs associated with carrying items in inventory. Storage and other related costs. The fixed costs associated with placing an order (Either a purchase price for orders outside or configuration costs for domestic orders). Costs associated with not having enough inventory to meet demand.
EOQ:
The COE can be calculated with the help of a mathematical formula. Following the assumptions involved in the calculation:
1. Constant or even uniform demand EOQ model assumes a constant demand, demand may vary from day to day. If demand is not known in advance, the model must be modified by the inclusion of security operations.
2. at constant prices drive EOQ model assumes that the purchase price per unit of material will remain unchanged regardless of the order from suppliers to include variable costs resulting from quantity discounts, the total amount in the EOQ model can be redefined.
3. Constant-current expenditure unit transport costs can very substantially as the size of the inventory increases, perhaps due to decreased economies of scale or storage efficiency or increase the storage space is exhausted and new stores for rent.
4. cost of constantly asked this assumption is generally valid. However, any violation in this respect can be accommodated through modification of the EOQ model in a manner similar to that used for the price variable unit.
5. Instant delivery if delivery is not instantaneous, it is often the case, the original EOQ model must be modified by the inclusion of a stock security.
6. Independent orders, when multiple orders result in cost savings by reducing paperwork and the cost of transport, must be original EOQ model further modified. While this change is complicated, especially EOQ models have been developed to cope.
These assumptions have been identified to illustrate the limitations the basic model of economic order quantity and the ways it can be easily modified to compensate for them.
The formula for the model EOQ is:
2 M Co
S CC
Where M = the annual demand
Co is the cost of ordering
Cc is the inventory carrying cost
S = the price of an item.
Limitations of the EOQ formula
1. Erratic changes, the formula uses involves the use of materials is expected and distributed evenly. When this is not the case, the formula becomes useless.
2. Order Defective basic information cost varies between different products and the cost of financing may vary with the opportunity cost of capital of the company. Thus, the hypothesis that the ordering cost and the cost of financing remains constant is defective and therefore EOQ calculations are incorrect.
3. expensive calculations: the calculations necessary to determine EOQ is extremely slow. more elaborate formulas are even more expensive. In many cases, the cost of the estimated cost of the possession and acquisition and calculation of EOQ savings exceeds made for the purchase of that amount.
4. No formula is a substitute for common sense-sometimes the EOQ may suggest that for a particular product every week (six years' supply), based on the assumption that we need at the same pace over the next six years. But we must ask in amounts according to our Apparently. Some items can be ordered every week, and some can be ordered monthly, depending on how feasible it is for the company.
5. EOQ order must be tempered with the guidelines sentence may offer a conflict in order. When a conflict strategy with a target operational order, restrictions on the strategy should be developed to allow in honor of the goal.
Volume discounts: In the EOQ analysis, it is assumed that prices of materials and transportation costs are constant factors for the range of numbers to consider. In practice, some situations arise in which the unit cost of delivery of a material significantly decreases if an amount slightly greater than initially calculated EOQ is purchased. Volume discounts, freight schedules and price increases can create this type of situation. These Additional variables may also be included in the formula.
Inventory carrying cost:
Take inventory of material is expensive. Several studies indicate that the annual cost of keeping an inventory of the average production approximately 25% of the value of inventory. The escalating and volatile costs money has increased the annual inventory carrying cost to between 25% – 35% of the value of inventory. The following five elements make up this cost
1) The opportunity cost (12% -20%)
2) cost of insurance (2% – 4%)
3) Property taxes (1% – 3%)
4) Storage costs (1% – 3%)
5) The obsolescence and deterioration (4% – 10%)
total financing cost (20% – 40%)
Let's briefly look at these costs:
Opportunity cost of invested funds
When a company uses the money to buy production materials and keeps it in inventory, simply have this cash, much less to spend on other purposes. The money invested in foreign securities or a yield productive team for the company. Therefore, it is logical to charge all the money invested in stock equal to the amount you could earn in another part of the company. This is the opportunity cost of with inventory investment.
Insurance cost
Most companies insure the goods against possible losses fires and other forms of damage.
Property Taxes
This is levied on the estimated value of the assets of an enterprise, the more is the value of inventory, account for the higher the value of assets and therefore the greater the firm's tax.
Storage costs
The store is depreciated each year throughout his life. This cost can be attributed the inventory of space occupation.
Obsolescence and deterioration
In most inventory operations, a certain percentage of the spoils of stock, damaged, stolen, or eventually becomes obsolete. A certain number always takes place even if handled with care.
Overall, this group of running costs rise and fall almost in proportion the rise and fall of the level of inventory.
ABC Classification:
Indicators that a material classified as an A, Part B or C according to their consumption value. The classification process is known as the ABC analysis.
The three indicators have the following meanings:
An important hand, the value of high consumption
B-least, half the consumption value
Part C-relatively minor, low-power value
The system ABC classification is to group items according to annual sales volume in an attempt to identify the small number of elements that make up the bulk of the volume sales and which are most important for effective management control of inventory.
Reorder Point: The inventory level I, which an order is placed where R = DL, D = demand rate (rate demand period (day, week, etc), and L = time of delivery.
Security Photo: inventory that persist between the time an order is made and when they receive new population. If there is not enough stock, then the shortage may occur.
Stock security is a hedge against the operation of registries. This is an extra inventory to take care of unexpected events. It is often called buffer stock. The lack of inventory is called a shortage.
ABC Inventory Classification
The ABC classification process is an analysis a series of articles, such as finished products or customers into three categories: A – exceptionally important; B – for medium, C – a relatively minor as a basis for the control scheme. Each category can and sometimes must be handled differently, with more attention paid to class A, B less, and less than C.
Inventory Control Application: The ABC classification system is to group items according to annual sales volume in an attempt to identify the small number of elements that make up the bulk of the sales volume and that are most important for effective management control inventory.
The break-even analysis depends on the following variables:
1. Price per unit: The amount of money charged to the customer for each unit of a product or service.
2. Total Fixed Costs: The sum of all costs necessary to produce the first unit of a product. This amount does not varies as production increases or decreases, until new capital expenditures are needed.
3. Unit Variable Cost: Costs that vary directly with production an additional unit.
Total Variable Cost The product of expected unit sales and variable unit cost, ie, expected sales of units times the unit cost variable.
4. Forecast Net Profit: Total revenue minus total cost. Enter zero (0) if you want to know the number of units to be sold in order to produce a gain of zero (but will recover all associated costs)
Siemens breakeven point: Number of units to be sold to produce a profit of zero (but will recover all associated costs). In other words, the equilibrium point is the point at which your product stops costing you money to produce and sell, and start generating a profit for your business.
where:
Q = point of equilibrium, ie, units of production (Q),
FC = costs fixed
VC = variable costs per unit
UP = Unit Price
Therefore,
Equilibrium Q = Fixed Cost / (Unit Price – Unit Variable Cost)
Stock and Inventory Control
Stock control, also known as inventory control, is used to show how much actions that have at one time, and how not to lose sight.
It applies to every element that is used to produce a product or service, from raw materials to products completed. It covers actions at all stages of the production process, from purchase and delivery to use and re-order actions.
Efficient stock control allows you the correct amount of material in the right place at the right time. It ensures that capital is not tied unnecessarily, and protects production if problems supply chain.
The supply chain inventory management providers:
It allows participants in the chain to critical share, demand and inventory information in real time and embedded applications and web based applications to reduce administration costs, reduce time cycle and reduce inventory levels. Our unique, managed supply hub requires little upfront investment, but quickly starts delivering high performance time real
Inventory Control Overview
Average Inventory
As it sounds, this type of inventory item will for most of its parts. It will track inventory properly received and sold on a first base, first, be responsible for costs of sales, and alert you when you are out of stock.
No Inventory Type
This is used to sell things that are not really inventory elements. For example, you could be selling the warranty, but because they have no guarantee on a box to sell, and you never run out of stock, not necessary to maintain inventory control on it. In addition, there is no cost of sales adjustments to non-stock items. The system will not calculate how much you paid for the item, so do not try to remove that value of inventory in the general ledger. If you are selling something that costs money, you have to manage this data manually.
Working Parts
You (probably) do not have technicians that hang from hooks in his back room and non-inventory items, the system will try to remove them from inventory when you sell a work item. The two differences between the elements outside inventory manpower are the elements that can optionally have the system will ask the technical code that did the job so that you can print reports that show who did what work. Optionally, the system will ask for a comment to explain what was done to the description of the service work can be printed on the invoice.
Also note that if you wish, you can track how much time is spent and how much time will be billed on a per job. At the end of the month, then you can print technician productivity reports to compare the total time spent compared to billable hours. In industry automotive mechanics can do the job some faster than is charged by the billing is based on industry standards.
Shipping Articles
Shipments can be used to track inventory they do not own, yet it sells, you pay for it. You will able to generate several reports, including an inventory list is entered, but not sold and a list of stocks sold on consignment, but not yet paid.
Inventory Floor Plan
Floor planning is very similar to shipment, unless it takes possession of the inventory and when I get it, but you do not have to pay for it until it is sold, or until it has been in the store for a negotiated time period. However, you are the owner of the inventory and has to pay for it sometime.
Some companies planning plant want to be able to check the serial number inventory by the number series of larger items, and others just may want to count the number of model number on each hand. Regardless, Windward System Five can handle it.
In the accounts payable side, you can keep track of who owes money too (Plant Planned company) and I really bought the inventory from (supplier) and generate stories of each.
Tire Inventory
Windward System Five has the ability to sort and classify the tire size, aspect ratio and rim size. In addition, it will also be able to search tires for those just entering some search criteria and the system displays a window of all parties.
When the list is a list of tires that all fit the vehicle, the system can sort the list to display items in stock with the largest number in the upper list and the items that are out of stock in the bottom of the list. This will help you sell what you actually have to sell rather than creating special orders.
Product Inventory
The products are items like vehicles you can be of service or repair after sale to customer. That is, are one element in the database that can be sold and when sold, are automatically added to the list of customers of the products that can be worked on.
Examples include cars, trucks, recreational vehicles, refrigerators, air conditioners, and chainsaws. The system allows you to maintain Additional information about these products, such as make, model, year, and other comments, and will also be able to list all jobs or repairs between two dates.
Windward System Five can also track grain products, such as recreational vehicles not to lose sight of the cost of the item before sale, and add other elements pre-delivery inspection. In addition, the system can generate a wash "out" a deep level report to show the costs and revenues related to traffic in.
Serialized Inventory
The elements to be monitored for his series of numbers can be marked as serialized inventory. For example, refrigerators, stoves, computers, and all chain saws can be serialized. Please note that if you think of the service of these items in the future and keeping track of all the work you do in them, should be entered as products rather serial numbers.
TYPES OF INVENTORY
There are different types of inventories are conducted, depending on the type of material involved and the type of information needed. Inventory septum septum
An inventory of close to closure is a physical count of all stock material in the vessel or within a specific inventory storeroom.A closure closure of a specific store when you take a random sampling inventory of warehouse inventory does not meet the accuracy rate of 90 percent when directed, as a result of a survey of supply management (SMI). It is also taken when directed by the officer command, or when circumstances clearly indicate that it is essential for efficient inventory control.
Inventory of specific products
The inventory of specific products is a physical count of all items under the symbol same knowledge, FSC, or support the same operational function, such as Ship spare parts, electronic tubes, boiler tubes, or fire brick. This inventory is taken under the same conditions as an inventory of close to closing, however, prior knowledge of the numbers of stock and item location is required to conduct an inventory of specific commodities
Special Material Inventory
A special material inventory requires the physical count of all the elements which, because of their characteristics physical, cost, mission essentiality, and criticality, are targeted to the separate identification and inventory control. material inventories special include, but are not limited to stored items designated as classified or hazardous. Special material inventories also include luggage controlled and silver presentation
Advantage Inventory Contr ol
Inventory Control gives you the ability to manage its inventory your way. As one of the most flexible and comprehensive modules in Advantage, you can choose the level of control that best suits their specific business needs. Inventory can be measured in a LIFO, FIFO or average basis of cost. You can choose to use parts of explosions, serialized inventory, assignment of parts, suppliers, warehouses and audit trails. The system can also track the quantity sold of each item of the last 12 months and, using this data provides a sales analysis report to help him cope with his actions. Funding is helped by the report serialized years shows that the articles were serialized in your inventory and how much longer is pending. Prices can be standardized by rounding to a particular factor or be set to a specific suffix. With the report below the minimum, the actions of reordering is automatic and accurate. Inventory Control is a separate module that can also be integrated with purchase orders, point Sales, Billing / order entry, work orders, time billing and quick sale.
21 characters alphanumeric item number field
Find the item number, item description (21 characters) and group (15 characters) fields
Tracks serialized items
Allows replaced, preceded and substitute items
Unlimited additional descriptions can be added to the elements
Manage trademarks and gross profit cost
You can automatically update the point of pricing and discounts
Handles basic prices
Produce a new order report based on minimum quantities Stock
unlimited tracks sales per item and recommends a "best" supplier
Topics allowances including allowances explosion
Up to 254 discounts per item, including quantity break discounts
Converting units can be defined for each element, both for purchase and sale of quantities
Allows warehouse transfers and other adjustments amount
Establish special sale dates subject to discount
Produces physical inventory forms
Imports physical inventory and received volumes of data collected with laptops
Provides up to 255 pieces of explosion levels allowing you to identify all components of its stock mounted
Automatically updates cost and price items explosion subset based on changes
• Reports of the best and worst selling items in each of eight different categories
• topics of the articles, by location or multiple warehouses amount
• You can automatically generate a template based elements of elements
• Use quick entry to facilitate data entry position
Disadvantages:
• conveyor has to be a slight decrease for the movement of cash (one way);
• You may need further reinforcement of the power units in some applications;
• Can not be used for travel between plants except travel below;
• The goods must be manually pushed when horizontal;
• no positive change control board;
• occurs when the buildup of pressure in the line.
• Require land efficiency
We propose a method for assessing new assemblies, recoverable, and recovered (products, components, parts, etc.) in production systems with reverse logistics. The values of the assembly influence at the appropriate rates and operating costs are therefore essential to compare strategies on average inventory cost models. It is argued that the method proposed is "right" of a discounted cash flow (DCF) point of view. We refer to some of the above results in the assessment of the assemblies in systems without disassembly of returned products that seem to confirm this. In addition, we tested the method on a concrete example with disassembly of returned products. The simulation results indicate that the method actually leads to (almost) the optimum DCF strategies inventory.
Packaging
At Siemens, with its large product volumes, low margins and fierce competition, is constantly seeking efficiency improvements in its supply chain. The retail sector supply uses an immense amount of packaging and is directly affected by packaging logistics activities. There is, therefore, a potential for improving efficiency in the supply chain grocery retailer through the integration and developing new packaging and logistics systems. management packaging is identified as one of the main activities that have a strong impact on the total cost of the supply chain. This research paper investigates the manipulation packaging evaluation methods and discusses how these are used to benefit the industry industry, have been used to evaluate packaging and logistics activities. This work, together with a review of the literature was used to identify the need for evaluation methods and the current availability of these methods. Results indicated a lack of sufficient and useful packaging handling evaluation methods in supermarkets and the packaging industry today, particularly from a logistical standpoint. The document also highlights the lack of systematization among the few methods used and explains how these can be used to build a systematic evaluation and multifunctional model to use information from different studies to build a knowledge base for the future
"Vendor-managed inventory
Siemens is a leading global manufacturer, focused on providing operational services to high technology companies, needed to take advantage of vendor managed inventory (VMI) and the deferral optimal fulfillment solutions to remain competitive in their market of low-margin manufacturing. Its objective was to find ways to reduce inventory redundancy, improved customer service by reducing cycle times and streamline supplier management and management of recruitment. The manufacturer also is needed to increase the existing infrastructure, while reducing investments in additional staff, facilities and systems
Vendor Managed Inventory (VMI)
Vendor Managed Inventory supports the efficient flow of materials on the market. Working closely with you and your suppliers to automate the process of management forecasts with web-based software that allows the flow of supplies to more accurately reflect Store – Even at platform level – demand.
Move your inventory and demand planning of our distribution centers and management. We can store and phase for the replacement release the product in our often limited or store rooms. We forecast visibility, comparing actual demand against the DC-in-hand, shop-in-hand and inventory in transit. When the store or inventory falls below pre-determined levels, auto alerts sent to you and your supplier replenishment system.
Advanced Shipping Notices (ASN) giving details of the inventory in transit from suppliers so you have more visibility of inventory in the supply chain. This allows trust to commitment orders on the basis of this input stream.
Postpone inventory ownership until shipment to your site. Once the stock moves to which we work with suppliers to transition the ownership of inventory until demand occurs.
Make value-added services, which allows you to handle more efficient flow of goods in the manufacture or directly to market.
Vendor Managed Inventory (VMI)
Vendor Managed Inventory by Kuehne + Nagel supports the efficient flow of materials on the market. Working closely with you and your suppliers to automate the management process forecasts with web-based software that allows the flow of supplies to more accurately reflect the store – and even at platform level – demand.
Move your inventory inside and outside of our distribution centers and manage demand planning with Web-based applications. We can store and stage products
About the Author
i am an graduate in business management studies and learning computer programming languages since the past 7 to 8 years. i also have practical knowledge in the field marketing and human resources.
Google, GM, Florida Aquarium & Bayshore Solutions Discuss Social Media