Paddles Ready

INVENTORY MANAGEMENT

I MANAGEMENT inventory

1. INTRODUCTION

Concept AND MEANING

Inventory is a list of goods and materials, or goods and materials themselves, held available in stock in a company. Inventory are maintained in order to manage and hide from the client, the fact that manufacture delay bid is higher than delaying the delivery and also to minimize the effects 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 reasons may apply to stock any owner or product stage.

stock damper is held in individual workstations against the possibility that the upstream workstation may be a little delay in the provision the next item for processing. Although some processes carry very large stocks, Toyota moved to one (or several items) and now changed to eliminate this type of actions.

Safety stock is held against the process or machine failure in the hope / belief that the fault can be repaired before the stock runs out. This type of material can be eliminated by programs such as Total Productive Maintenance

Overproduction is carried because the forecast and actual sales do not match. Making the order and JIT eliminates this type of stock.

Lot delay stock is held because a part of the process is designed to operate in a single batch, as a basis for processing items individually. Thus, each item of the lot must wait the entire batch to be processed before moving to the next station. This can be eliminated through casual work or a lot size of one.

Demand stock flotation is performed when the production capacity is unable to flex with demand. Therefore, an action is built in the time of use should be smaller provided to customers when demand exceeds production capacity. This can be eliminated by increasing the flexibility and capability of a production line or reduced by balancing item to move to the level of charge.
Online stock balance is maintained because different sub-processes in a line of work at different rates. So stock will accumulate after a fast sub-process or before a lot of large sub-process. line balancing will eliminate this type of stock.

Passage of shares is carried out after a sub-process that has a long setup or change over time. This stock is used, while change is happening. This stock can be eliminated by tools like SMED.

When these stores contain the same or similar items is often the practical work for all of these stocks mixed before or after the sub-process to which they relate. This "reduces" costs. Because they are mixed together, there is no visual reminder to operators of the adjacent sub-processes or management of online material that is due to a specific cause and should be the responsibility of a particular individual, with inevitable consequences. Some plants have centralized storage in sub-processes which makes the situation even more acute.

The basis of inventory accounting

Inventory must be accounted for, where is accomplished through limits for the exercise since generally expenses should be compared with the results of that spending the same period. When the processes were simple and short, so stocks were small, but with more complex processes, then, inventories have become larger and significant items valued in the balance. This need not present the property sold incomplete and led many new behaviors in the practice of management. Perhaps most significant of these is the complexities of recovery of fixed costs, prices transfer, separation of direct and indirect costs. This is supposed to prevent "anticipated revenue" or "declaration of dividends out of capital. "It is one of the intangible benefits of Lean and TPS that the process times and lower levels decline to the point where the importance this activity is extremely low and therefore effort, especially management, to achieve it can be minimized.

V LIFO / FIFO S

When a dealer sells goods from inventory, the inventory value by reducing cost of goods sold (CoG sold). This is simple when the CG did not change among those held in stock, but which has an agreed method must be derived. For items of merchandise that can not be controlled individually, accountants must choose a method that suits the nature of the sale. There are two popular methods: FIFO and LIFO accounting (first – first, first out) – in the past. FIFO referred The first unit that arrived in the inventory of first sale. LIFO considers the last unit to arrive in the inventory as the first sold. Which method selects a counter can have a significant effect on net income and book value and hence on taxation. Using LIFO accounting for inventory, the company generally reports lower net income and lower book due to the effects of inflation. This usually results in lower taxes. Because of the potential to tilt the LIFO inventory value, UK GAAP and IAS have effectively banned LIFO inventory accounting.

SUPPLY CHAIN MANAGEMENT

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation these materials into intermediate and finished products, and distribution of these finished products to customers. Supply chains exist in both organizations service and manufacturing, although the complexity of the chain may vary greatly from sector to sector and company to company.

Supply chain management is commonly viewed lie between vertically integrated companies, where the entire material flow is owned by a single firm and those where each channel member operates independently. Therefore, coordination between the various actors in the chain is fundamental to their effective management. Cooper and Ellram [1993] compares the management of the supply chain to a relay team as well balanced and well practiced. This team is more competitive in that each player knows to be positioned for hand-off. The relationships are stronger among players who directly pass the baton (stick), but the whole team must make a concerted effort to win the race.

Below is an example of a simple chain for a single product, where raw material is purchased from vendors, transformed into finished products in a single step, and then transported to distribution centers and, ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capabilities. The flow of materials is not always along an arborescent network, various modes of transport can be considered, and the list of materials for the end items may be deep and large.

To simplify the concept, supply chain management can be defined as a cycle: it starts with the customer and ends with the customer. All materials, finished goods, information and even flow of all transactions through the loop. However, supply chain management can be a very difficult task, because in reality the supply chain is a complex and dynamic structures and organizations with different conflicting objectives.

Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from sector to sector and from company to company.

Unlike commercial production supplies, services such as supply planning clinics are very dynamic and can often have last minute changes. Availability kit patient when the patient arrives at the research center is very important to the success of the trial. This resulting in excess medication to take care of last-minute change in demand. manufacturing R & D is very expensive and overproduction of patient kits adds significant costs to the total cost of clinical trials. An integrated supply chain can reduce the excess production of drugs for the management of efficient search, planning and inventory management.

Traditionally, marketing, distribution, planning, and manufacturing organizations shopping along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. goal marketing customer service and high-dollar sales up conflict with the goals of production and distribution. Many manufacturing operations are designed to maximize productivity and reduce costs with little regard for the impact on inventory levels and distribution capacity. contracts purchase are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is a single plan and integrated for the organization — there were as many business plans. Clearly, there is a need for a mechanism by which these functions different can be integrated. Supply Chain Management is a strategy through which such integration can be achieved.

Supply Chain Management (SCM) is the process of planning, implementing and controlling the operations of the supply chain in order to satisfy customer needs as efficiently as possible. Supply Chain Management covers all handling and storage of raw materials, work in process inventory and finished goods from point of origin to the point of consumption.

According to the Council of Supply Chain Management Professionals (CSCMP)

A professional association that developed a definition in 2004, Supply Chain Management "comprises the planning and management of all activities involved in sourcing and procurement of conversion, and all logistics management activities. "Importantly, 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 supply and demand management within and between companies.

From According to Cohen and Lee (1988)

Supply Chain Management is "A network of organizations that are having links, both upstream and downstream, in different processes and activities that produces and supplies the value in the form of products and services in the hands of the consumer. "Thus, a shirt manufacturer is a part of the supply chain that extends upstream through the weaving of fabrics for the wiring and fiber manufacturers and low flow through distribution and retail to the final consumer. Although each of these organizations are dependent on each other yet not traditionally work closely with others. A supply chain integrated streamlines 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 with Ganeshan & Harrison (2001)

Supply Chain Management is a "systems approach to managing the entire flow of information, materials and services from suppliers of raw materials from factories and warehouses to the end customer. "

Demand Management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that may cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned.

Some experts distinguish supply chain management and logistics management, while others consider the terms are interchangeable. From the standpoint of a company under the management of the supply chain is generally limited to the provision of suppliers from your supplier client side and the client's customers.

Supply chain management is also a category of software products.

2. SIEMENS

Siemens is one of the world's largest companies and Europe's largest engineering company. Siemens has six major business divisions: Communication and Information, Automation and Control, Food, transportation, medical and lighting. Siemens' international headquarters located in Berlin and Munich, Germany. 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 of October 1, 1847, based on the telegraph was invented that used a needle to point to the string of letters, rather than using the code Morse. The company – then called Telegraphen-Bauanstalt von Siemens & Halske – opened its first workshop on October 12.

In 1848, the company built the first line long-distance telegraph in Europe, 500 km from Berlin to Frankfurt. In 1850, the younger brother of the founder, Sir William Siemens (born Carl Wilhelm Siemens) began to represent the company in London. In the 1850s, the company was involved in building long distance networks of the telegraph in Russia. In 1855, a subsidiary of the company headed by another brother, Carl von Siemens, opened in St. Petersburg. In 1867, Siemens completed the monumental Indo-European (Calcutta to London) the line Telegraph.

In 1881, the Siemens AC alternator driven by a water mill was used to power the lighting of the world's first electric street in the city from 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 to his brother Carl and Arnold children and Wilhelm. Siemens & Halske (S & H) was incorporated in 1897.

In 1919, the S & H and two other companies jointly formed the company lamps Osram. The Japanese subsidiary was established in 1923.

During the 1920s and 1930s, S & H started to manufacture radios, televisions, and electronic microscopes.

Before the Second World War, Siemens was involved in the secret rearmament of Germany. During the Second World War, like most large companies in Germany time, Siemens supported the Hitler regime, contributed to the war effort and participated in the "denazification" of the economy. Siemens had many factories and about the extermination camps like Auschwitz and famous used 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 Siemens factory inside the death camp, providing energy to the camp.

In the 1950s and its new headquarters in Bavaria, S & H started to manufacture computers, semiconductors, washing machines, and pacemakers. Siemens AG was established in 1966. The company's first digital telephone exchange was produced in 1980. In 1988, Siemens and GEC acquired the UK defense and technology company Plessey. Plessey holdings were divided, and Siemens took over the avionics, radar and traffic control companies – including 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 color display. Also in 1997, Siemens agreed to sell the arm of Siemens Plessey British Aerospace (BAe) and a British government agency, the Defence Analytical Services Agency (DASA). BAe and DASA acquired the British and German divisions of operation, respectively.

In 1999, Siemens' semiconductor operations were spun off into a new company called Infineon Technologies. Moreover, Siemens Nixdorf Informationssysteme AG was part of Fujitsu Siemens Computers AG in that year. The group of retail banking technology became Wincor Nixdorf.

In February 2003, Siemens has reopened its office in Kabul [3].
In 2004, Siemens took over the mantle of official Formula One timekeeper, replacing TAG Heuer.

In November 2005, Siemens signed an agreement for 12 years with the Walt Disney Company to sponsor attractions at its parks in Florida and California.

In 2006, Siemens announced the acquisition of Bayer Diagnostics, which was incorporated into the Medical Solutions Diagnostics division officially on January 1, 2007.

In March 2007 a Siemens board member was temporarily arrested and accused of illegal funding of a trade association of companies that compete favorably against the union IG Metall. He was released on bail. Offices of the union and Siemens have been searched. Siemens denies any wrongdoing.

In April 2007, fixed networks, mobile networks and Carrier Services divisions of Siemens merged with Nokia's Network Business Group in a 50/50 joint venture, creating a network company called Nokia and mobile Siemens Networks. Nokia delayed the merger due to investigations of bribery against Siemens.

Through an American sub-organization known as Siemens Foundation, Siemens also devotes resources to reward students and teachers AP. One of its main programs is the Siemens Westinghouse Competition in Math, science and technology, which annually awards grants of up to U.S. $ 100,000 for both team and individual operators. According to the foundation website, awards Siemens a total of about U.S. $ 2 million in scholarship money each year.

Major clients SIEMENS

-KCR
-Novartis
-Edmonton Transit System
-Calgary Transit
-Deutsche Bahn AG (German railway company)
-Metrorail (Houston, Texas)
Sacramento Regional Transit District-
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
Indian Railways
-Airtel
Powergrid Corporation of India-

Products

-Industrial Instrumentation (Sensors & Controls)
-Telecommunications Services Platform, the TSP 7000
-Matching, electrical and ULF Avanto
Duwag U2-Siemens-LRV
ER20-locomotive – MTR
Metro M1/M2/M3 March -LHB/Siemens Pair
Siemens-Adtranz LRV-
-Duewag/Siemens 1435 mm Low Flr LRV Combino
MX3000-car Metro Oslo (SGP Wien works)
S4000-meter
Be -Schindler/Siemens ABB Low Floor LRV 08/04
Metro-5001
SWBSiemensr NGT 6D LRV-
Eurosprinter-locomotive
-Desiro, ICE, and Transrapid trains
-Gigaset, home entertainment products, including Gigaset M740 AV, a set-top box to receive TDT and integrate it into a wireless home network (using WLAN or cable), ie for home streaming media.
E-Hicom Trading
Hicom-300
HiPath-
HiQ 8000 Softswitch
-MSR32R
-EWSD telephone exchanges
SPX-2000 digital telephone exchange small (rural)
-Siemens Gigaset cordless phones
-Siemens Mobile Phones – BenQ divested in 2005
Siemens SPPA-T2000-Control System (formerly Teleperm XP)
SPPA-T3000-Siemens control system (for generating Control power)
-SIMATIC PCS 7 Process Automation System Process and Hybrid industries
Radio-and essential products for 2G and 3G Networks (GSM, UMTS, …)
Gas & Steam Turbines
Programmable industrial controls (including Simatic PLC, and SOON! Microcontrollers)
-A Siemens Servo life support ventilator line
-MAGNETOM (TM) Espree
-SOMATOM (R) Definition CT
-SOMATOM (R) Sensation CT
SOMATOM- (R) Emotion CT
AXIOM Artis-
AXIOM Sensis-
E.Cam-Signature Series Gamma Camera
TRuepoint-Symbia SPECT-CT
Biograph-PET.CT TRuepoint
Magnetom C!-A low-field open MRI
Magnetom Avanto, a Tim system MRI
Magnetom Espree, a Tim system, open MRI gave
Magnetom- Trio, A Tim System, ultra high field MRI
Windturbine-, 1.3 MW, 2.3 MW, 3.6 MW
-Sinorix (TM)
-Sistore (TM)

Top Siemens competitors are:

-ABB
Alcatel-Lucent
-Alstom
-Automated Logic
-Bombardier
Cisco Systems
-Computrols
-Eaton
-Ericsson
General Electric
-Honeywell
Johnson Controls
Lantronix-
-Nortel
Philips
Controlled trust
Rockwell- Automation
-Samsung
Schneider-Electric

3. OBJECTIVES AND NEED FOR SUPPLY CHAIN 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 conflicting.

goal of marketing to customer service and sales of high dollar up the conflict with the goals of production and distribution. Many manufacturing operations are designed to maximize yield lower costs with little consideration of the impact on inventory levels and distribution capabilities. purchase contracts 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 no how many business plans. Clearly, there is a need for a mechanism by which these different functions can be integrated. Supply Chain Management is a strategy through which such integration can be achieved.

Moreover, shortening product life cycles, increased competition, and increased customer expectations have forced many leading companies to move from physical logistic management to more advanced management of the supply chain. Moreover, in recent years it has become clear that many companies have reduced their production costs as much as is practically possible. Therefore, in many cases the only possible way to further reduce costs and delivery times is with an effective management of the supply chain.

Besides the reduction costs, supply chain management approach also facilitates customer service improvements. It enables management to:

– Inventories
– Transport Systems and
– Distribution networks throughout

so that organizations are able to meet or exceed the expectations of its customers.

The main objective of supply chain management is to reduce or eliminate the inventory buffer that exists between the origination chain through sharing information on inventory levels and actual demand.

In general terms, an organization needs an effective and appropriate management system supply chain for the following strategic and competitive areas can be used to its full advantage if a system for managing the supply chain is properly applied.

1. Compliance with the raw materials:

Ensuring the right quantity of parts for production or products selling arrives on time. This is enabled through efficient communication, ensuring that orders are placed with the appropriate amount of time available for be filled. The system of supply chain management also allows a company to constantly see what is in stock and ensure that the correct quantities are ordered to replace the stock.

2. Logistics:

The cost of transporting materials as low as possible consistent with delivering Safe and reliable. Here, the supply chain management system that allows a company to have ongoing contact with its distribution team, which could consist on trucks, trains, or any other mode of transportation. The system may allow the company to track where materials are required at all times. As well, it can be profitable to share transportation costs with a partner company, if the transfers are not large enough to fill an entire truck and this time, it allows the company to make this decision.

3. Smooth production:

production lines, ensuring good operation because the high quality parts are available when needed. Production can run smoothly as a result of the completion and logistics being implemented correctly. If the correct amount is not ordered and delivered at the requested time, production will stop, but with an effective management system supply chain in place will ensure that production can always run smoothly without delays due to ordering and shipping.

4. Increase in Revenue and profit:

Ensuring no sales are lost because shelves are empty. Managing the supply chain improves the company greater flexibility to respond to unforeseen changes in supply and demand. Because of this, the company has the capacity to produce goods at lower prices and distribute them consumers more quickly, so companies without a supply chain management, thus increasing the total profit.

5. Cost Reduction:

Keeping the cost of parts and products purchased at acceptable levels. Supply chain management reduces costs by increasing inventory turnover in the store and warehouse handling product quality, reducing costs of internal and external failures and work with suppliers to produce the most cost effective means of manufacturing of a product.

6. Mutual success:

Between supply chain partners, ensuring mutual success. Collaborative forecasting planning and replenishment (CPFR) is a long-term commitment, working together for quality and support by the buyer of supplier management, technological capacity and development. This relationship allows a company to access current and reliable information, achieve lower inventory levels, reduce delays, improve product quality, improve forecast accuracy and ultimately improve customer service and overall profits. Vendors also benefit from the relationship cooperation through increased buyer input of suggestions about improving the quality and cost savings despite sharing. Consumers can benefit also, through high quality products supplied at a lower cost.

4. Activities / functions of SCM at Siemens

Supply Chain Management is a cross-functional approach to managing the movement of raw materials into an organization and movement of finished goods out the organization to the ultimate consumer. As companies strive to focus on core competencies and become more flexible, they have reduced their share of renewable raw materials and distribution channels. These functions are increasingly outsourced to other companies that can perform better cost or activities more effectively. The effect has been to increase the number of companies involved in satisfying consumer demand, while reducing management control the daily operations of logistics. Less control and more supply chain partners led to the creation of the concepts of supply chain management. The aim management of the supply chain is to improve trust and collaboration between supply chain partners, thus improving inventory visibility and improving inventory velocity.

Various models have been proposed for understanding the activities required to manage the movement of materials across organizational boundaries and functional. SCOR is a management model of supply chain promoted by the Supply-Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical and operational activities.

(A) Strategy: –

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 information reviews and operational improvements such as cross docking, direct shipping and third party logistics.

-Product design coordination, so that products new and existing can be seamlessly integrated into the supply chain.

-Technology infrastructure information to support the operations of the chain supply.

-Where do and what make or buy decisions.

(B) Tactical: -

-Sourcing contracts and other purchasing decisions.

Production decisions, including hiring, local programming and planning process definition.

Inventory decisions, including quantity, location and quality of inventory. Transportation strategy, including frequency, routes and contracting.

Comparative analysis of all operations against competitors and implementing best practices across the enterprise.

(C) Operations: -

-Daily production and distribution planning, including all nodes in the supply chain.

Production scheduling for each unit of production in the supply chain (minute by minute).

Demand planning and forecasting, coordinating the demand forecast of all customers and share with the estimate of all suppliers.

The planning of sourcing, including current inventory and forecast demand, in collaboration with all suppliers. entry operations, including transportation from suppliers and receiving inventory.

Production operations, including consumption of materials and finished products, goods flow.

-Output operations, including completion of all activities and transport to customers.

Order promising, accounting for all constraints in the supply chain, including all suppliers, factories, service centers distribution, and other customers. Performance tracking of all activities.

INTEGRATED MANAGEMENT OF JAIL

A chain of streamlines integrated supply 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 supplies commercial production of clinical supplies planning is very dynamic and can often have last minute changes. Availability of patient kit when the patient arrives at the research center is very important to the success of the trial.

This results in excessive medication to take care of change Last minute demand. manufacturing R & D is very expensive and overproduction of patient kits adds significant costs to the total cost of clinical trials.

An integrated supply chain can reduce the excess production of drugs for effective demand management, planning, and inventory management. Implementation of ERP system (such as SAP) in R & D may have a source for great ROI and efficient inventory management system and also by reducing of overproduction.

How-Integration is achieved in the supply chain?

Phase 1:

complete functional independence in which each business function, such as the production or purchase does its own thing in complete isolation other business functions. For example, the production function to optimize the unit cost of production for production of long runs with regard to the accumulation of finished goods inventory and advance that will have impact on the storage and working capital.

Phase 2:

Companies recognize the need for integration between the adjacent limited functions such as distribution and inventory management or purchasing and material control.

Phase 3:

A natural extension of the second phase, leading to the creation and implementation of end-to-end integration. A concept of articulation and coordination is achieved.

STAGE 4:

The relationship reached the third stage is extended to upstream suppliers and downstream customers. It represents real stock integration chain. This concept is also called "co-managed inventory (CMI).

Force supply chain management is trust and cooperation and the recognition that is well run "the whole sugarcane is greater than the sum of its part.

Inventory Decisions:

Refers to the means by which inventories are managed. Stocks in each step of the supply chain, both of raw materials, products semi-finished or finished products. They can also be in progress between localities. Their primary purpose to buffer against the uncertainties that exist in the supply chain. Since holding of inventories can cost between 20 to 40 percent of its value, its efficient management is crucial to the operations of the supply chain. It is long term in the sense that top management sets goals. However, most researchers have approached the inventory management of short-term perspective. These include deployment strategies (push vs. pull), control policies — determining the optimal order quantities and the points refueling, and setting safety stock levels at each stocking location. These levels are critical because they are primary determinants levels of customer service.

5. STOCK CONTROL MANAGEMENT

Database Inventory

An important component of inventory planning involves accessing a database inventory. It is a structured framework that contains the necessary information to effectively manage all inventory items, from raw materials to finished products. This information includes the classification and amount of inventory, demand for items, cost to the company for each item, ordering costs, transportation costs and other data.

The task of inventory planning can be very complex. While it rests on the fundamental rights principles. In doing so we need to understand and determine the optimum batch size has to be ordered. The EOQ (amount of economic order) refers to the ideal size that will result in lower total order and shipping costs and the costs order. When calculating the amount of the economic enterprise attempts to determine the size that will minimize total inventory costs. In examining the two curves shows that the cost curve is linear transport or over the inventory held in any period, the greater the cost of its production. Ordering cost curve, on the other side is different. The cost of ordering decreases with increasing order sizes. The point where the cost curve ie, keeping the cost curve of transport and sorting of the cost curve are, represent the lowest total cost of which, incidentally, is the economic order quantity or the ideal amount.

PRODUCTIVITY

In industries, there will be a competitor a low-cost producer and have higher sales in the sector. This is partly due to economies of scale that allow fixed costs to spread across a larger volume, but more especially for the impact of the experience curve.

You can identify and predict the improvements in output of workers, they become more skilled the processes and tasks in which they work. Bruce Henderson extended this concept by demonstrating that all costs, not just production costs, decrease to a certain rate of increase in volume. This cost reduction applies only to the value added, or other expenses that did not buy the supplies. Traditionally, it has been suggested that the main way of reducing costs has been gaining increased sales volume and there can be no doubt about the close link between market share and relative costs. However, it should also be acknowledged that the logistics management can provide a variety of ways to increase efficiency and productivity and thereby contribute significantly reduced unit costs.
In today's more turbulent environment, there is no longer any possibility of manufacturing and marketing act independently of each other. It is now generally accepted that the need to understand and meet customer needs is a prerequisite for survival. At the same time, in pursuit of cost competitiveness improved management of production has been the subject of full-scale revival. The last decade has seen the rapid introduction of flexible production, new approaches to inventory based on material requirement planning (MRP) and just in time (JIT) methods, an emphasis sustained quality.
Also, there has been an increasing recognition of the vital role it plays in creating and acquiring sustain competitive advantage as part of a process of integrated logistics.

In this scheme of things, logistics is therefore essentially an integrative concept that aims to develop a vision system large company. It is fundamentally a planning concept that seeks to create an environment where the needs of manufacturing strategy and plan, in connection become a strategy and acquisition plan.

Inventory Flow:

The logistics management is concerned with the handling and storage of materials and finished products. logistics operations beginning with the initial issuance of a material or component from a supplier and are terminated when a product manufactured or processed is delivered to a customer. Since the initial purchase of a material or component, the value added logistics process. By move inventory when and where needed. Thus, the material gains value at every step. For a large manufacturer, logistics operations may consist of thousands movements that culminate in the delivery of the product to an industrial user, wholesaler, distributor or customer. Likewise for a retailer, the operations logistics be started with the purchase of goods for resale and can end with payment or delivery to the consumer.

The important point is that regardless of size or type of business, logistics is useful and requires continuous management attention.

Costs INVENTORY

Inventory carrying cost (ICC):

-Tax
Storage
Capital
Insurance
-Obsolescence
-Ordering:
-Communication
-Processing, including material
Handling and packaging
Get up activities, including
Receiving and processing date

Basic decisions Inventory

There are two basic decisions that must be made for each item which is kept in stock. These decisions have to do with the timing of orders for the item and size of orders for the item.

RELEVANT Inventory costs

Item costs, expenses Holding, Ordering, scarcity costs,
Direct cost for one item. Purchase costs for orders outside of manufacturing cost for domestic orders. Costs associated with items in stock. Storage and other related costs. The fixed costs associated with placing an order (or purchase cost for orders from outside, or the cost of an installation for domestic orders). The costs associated with not having enough inventory to meet demand.

EOQ:

The EOQ can be calculated with the help of a mathematical formula. following assumptions are implicit in the calculation:
1. demand constant or uniform, Although the EOQ model assumes constant demand, demand can vary from day to day. If demand is not known at the pre-model must be modified by the inclusion of security actions.
2. constant unit price, the EOQ model assumes that the purchase price per unit of material will remain unchanged, regardless offered by suppliers in order to include the variable costs resulting from volume discounts, the total cost of the EOQ model can be redefined.
3. Constant costs transportation unit costs of transport can very substantially as the size of the increase of stock, perhaps diminishing due to economies of scale or efficiency of storage and increase storage space is exhausted and new warehouses to be rented.
4. Constant cost ordering this general assumption is valid. However, any violation in this regard can be accommodated by modifying the EOQ model in a manner similar to that used for the unit price varies.
5. Instant delivery, if delivery is not instantaneous, which is usually the case, the original EOQ model must be modified by the inclusion of a safe stock.
6. Whatever orders the result by several orders of reducing costs, reducing paper work and cost of transportation, the original EOQ model should be further modified. While this modification is a bit complicated, special EOQ models were developed to deal with it.
These assumptions have been shown to illustrate the limitations of the basic EOQ model and the ways it can be easily modified to compensate them.

The formula for the EOQ model is:
2 M Co
S Cc

Where M = the annual demand
Co is the cost of sorting
Cc is the cost of stock
S = is the unit price of an item.
Limitations of the EOQ-formula
1. Erratic changes uses, the formula assumes that the use of materials is expected and well distributed. When this is not the case, the formula is useless.
2. Defective basic information of order cost varies from product to product and the carrying cost will vary according to the company's cost of equity of opportunity. Thus, the assumption that the cost of ordering and carrying cost remains constant is defective and therefore EOQ calculations are not correct.
3. expensive computation, the calculation required to find the EOQ is extremely time consuming. Formulas more developed are more expensive. In many cases, the cost of estimating the cost of ownership and acquisition and calculation EOQ purchasing savings exceed this amount.
4. None formula is a substitute for common sense, sometimes the EOQ may suggest that we ask for a given product per week (six years of supply), based on the assumption we need it at the same rate for the next six years. However we have to order it in quantity according to our trial. Some items may be ordered for each weeks, some can be ordered on a monthly basis, depending on how it is feasible for the company.
5. EOQ ordering must be tempered with the trial, sometimes Guidelines provide a conflict in order. If a conflict to an objective strategy to operational constraints the strategy must be developed to allow the goal to honor.

Quantity discounts: On the EOQ, it was assumed that the prices of material and transportation costs are constant factors for gamma of order quantities considered. In practice, some situations occur where the unit cost of supply of material is reduced significantly if a slightly greater than initially calculated EOQ is purchased. Quantity discounts, schedules for freight and price increases may create such situations. These additional variables can also be included in the formula.

Cost of holding inventory:

Carrying material in stock is expensive. A series of studies indicated that the annual cost of making an inventory of production average approximately 25% of inventory value. Costs growing and volatile cash has increased the annual inventory cost of transport to a value between 25% – 35% of inventory value. The five elements that comprise this cost:
1) Opportunity cost (12% -20%)
2) cost of insurance (2% – 4%)
3) Property taxes (1% – 3%)
4) Storage costs (1% – 3%)
Obsolescence 5) and deterioration (4% – 10%)
total carrying cost (20% – 40%)

Let us briefly examine these costs:

Opportunity cost of invested funds

When a company uses cash to buy materials production and keeps it in inventory, it just has that much less money to spend for other purposes. The money invested in foreign securities or in productive equipment earns a return for the company. Thus, it is illogical to charge any money invested in inventory an amount equal to what he could earn elsewhere in the company. This is the opportunity cost associated with investing in stocks.

Insurance cost

Most companies safeguard the assets against losses from fire and other damage.

Property taxes

This is levied on the estimated value of the assets of a company, the greater the value of inventory, higher the value of assets and payment of taxes, hence the company's largest.

Storage costs

The warehouse is depreciated each year during the period of his life. This cost can be attributed to the inventory taking up space.

Obsolescence and deterioration

Most of the inventory operations, a certain percentage of the spoils of values, is damaged, stolen or eventually becomes obsolete. A number always happens, even if they are handled with care.

In general, this group of transport costs rise and fall almost in proportion to the rise and fall of the stock level.

The ABC classification:

Indicators that classifies as a material, B or C in accordance with Part the value of consumption. The classification process is known as the ABC analysis.
The three indicators have the following meanings:
An important part, high-value consumer
B-least, the average consumption value
C-relatively unimportant part, the low value

The classification system ABC is the grouping of items according to annual sales volume in an attempt to identify the small number of items that account for most of the sales volume and are the most important for the control of effective inventory management.

Reorder Point: The inventory level R in which an order is placed where R = DL, D = demand rate (demand rate period (day, week, etc.), and L = waiting time.

Safety Stock remaining stock between the time a request is made and when the stock is received. If there is enough stock, then a shortage may occur.
Safety stock is a hedge against running out of inventory. It is an extra stock to meet unexpected events. It is often called buffer stock. The lack of inventory is called scarcity.

ABC Inventory Classification

The classification process is an ABC analysis of a number of items, such as finished products or customers into three categories: A – exceptionally important, -, C – relatively unimportant, as the basis for a control scheme B of average size. Each category can and should sometimes be treated differently, with more attention being devoted to category A, B less and less to 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 items that account for most of the sales volume and that are most important for the control of effective inventory management.

Break-even analysis depends on the following variables:
1. Selling Price per Unit: The amount of money charged to the customer for each unit a product or service.
2. Total Fixed Costs: The sum of all costs required to produce the first unit of a product. This amount does not vary as production increases or decreases, until new capital expenditures are required.
3. Variable Unit Cost: Costs that vary directly with production an additional unit.
Total Variable Cost The product of expected unit sales and unit variable cost, ie, it expects unit sales times the cost unit 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 profit of zero (but will recover all associated costs)

Equilibrium point at Siemens: number of units to be sold in order to produce a profit of zero (but will recover all associated costs). In other words, the equilibrium point is the point at which the product stops costing you money to produce and sell, and start generating profits for your company.
where:
Q = equilibrium point, ie, units of production (Q),
CF = fixed costs,
VC = variable costs per unit
UP = Unit Price
Therefore,
Equilibrium point Q = Fixed Cost / (Price Unit – unit variable cost)

Stock control and inventory

Inventory Control, also known as inventory control, is used to show how many shares you have at any time and as you keep control of it.
It applies to all items you uses to produce a product or service, from raw materials to finished products. It covers actions at all stages of the production process, from purchase delivery and use and re-ordering the stock.

Efficient stock control allows you to have the right amount of inventory in the right place at the right time. It ensures that capital is not tied unnecessarily, and protects production if problems with the supply chain.

the supply chain inventory management of supplier:

It allows supply chain partners to share critical order demand and inventory information and uses real-time embedded applications and web based to reduce administrative costs, reduce cycle times and help lower inventory levels. Our unique, managed supply hub requires little upfront investment, but quickly starts delivering high performance in real time

Overview control inventory

Normal Inventory

As it seems this type of inventory item is used for most of its parts. He will accompany inventory correctly received and sold in a first ground, first, will handle the cost of sales, and will warn you when you're out stock.

Non-Type Inventory

This is used to sell things that really are not inventory items. For example, you could sell the collateral, but because you have no guarantee on a box to sell, and you'll never run out of stock, you will not need to maintain control inventory on it. As well, there is no cost of sales adjustments of inventory items. The system will not calculate how much you paid for the item and, therefore, do not try Remove the stock value in Reason. If you're selling something that costs you money, you have to deal with these details manually.

Parts work

You (probably) have no technical hung from hooks in his back room, as well as non-stock items, the system will not try to remove them from inventory when you sell an item of work. The differences between the two non-inventory items work items are you can, optionally have the system ask for the code of the technician who did the work so you can print reports showing who did the work. In addition, the system will optionally ask for a comment to explain what was done so that the service description can be printed on the invoice.

Note also that you can optionally keep track of how much time was spent and how much time was billed on a per job. At the end of the month, then you can print reports productivity of technicians to compare the total time spent in relation to billable hours. In the automotive industry, some mechanics can do the job more is faster than what is charged because the billing is based on industry standards.

Consignment Items

Remittances can be used to control the stock that you do not, but when you sell it, you should pay for it. You will be able to generate various reports, including an inventory list that is the lot, but not sold and an inventory sold on consignment, but not yet paid.

Floor Inventory Plan

Floor plan is very similar to the lot, except that you take possession and own inventory when you receive it, but you do not have to pay for it until it is sold, or until it is in storage for a negotiated period of time. However, you have the inventory and have to pay for it someday.

Some companies planning ground or the ability to check the serial number inventory by serial number for the larger items, and others may simply want to count the number of each model number on hand. Regardless, Windward System Five can handle it.

On the accounts payable side, you will be able to track what you owe the money too (Floor Planning Company) and that you actually bought the stock (supplier) and generate appropriate stories of each.

Tire Inventory

Windward System Five has the ability to sort and categorize tires by their size, shape and size of the rim. In addition, you will also be able to search for tires by just entering some search criteria and the system open a window every game.

When the list has a list of tires that can fit in the vehicle, the system can sort the list to display items with the greatest amount stock on the list and the items that are out of stock at the bottom of the list. This will help you sell what you actually have to sell instead of making orders special.

Product Inventory

The products are items such as vehicles that you can repair or service then sell them to the client. That is, they are an item in the database that can be sold and when sold, are automatically added to the customer list of products that can be worked on.

Examples are vehicles, trucks, recreational vehicles, refrigerators, air conditioners, and chainsaws. The system will allow you to keep information about these products, such as make, model, year and other comments and also be able to list all the work or repairs performed between two dates.

Windward System Five can also track all the goods like recreational vehicles, keeping track of the cost item before the sale, and add more items from pre-delivery inspection. In addition, the system can generate a "wash" report to a deep level show costs and revenues associated with trade in.

Serialized Inventory

Items that need to be controlled by Your serial number can be marked as serialized inventory. For example, refrigerators, stoves, computers, chainsaws and anything can be serialized. Note that if you are thinking of keeping these items in the future and keep track of all the work you do for them, should be entered as commodities instead of serial numbers.

TYPES OF INVENTORY

Several different types of inventories are conducted, depending on the type of material involved and type of information required. Inventory-to-screen screen

An inventory of the bulkhead-to-bulkhead is a physical count of all stock material within the vessel or within a specific inventory storeroom.Aa bulkheads bulkhead of a store-specific is taken when a random sampling of inventory that inflow not meet the inventory accuracy rate of 90 percent when driven as a result of a supply management inspection (SMI). It is also taken when directed by the commander or when circumstances clearly indicate that it is essential to effective inventory control.

Specific commodity inventory

The specific commodity inventory is a physical count of all items under the symbol of knowledge itself, FSC, or who support the same function operational, such as boat parts, electron tubes, boiler tubes, or fire brick. This inventory is taken under the same conditions as an inventory bulkhead-to-bulkhead, however, prior knowledge of the numbers of specific actions and location of the item is necessary to conduct an inventory of specific commodity

Special Material Inventory

A special material inventory requires the physical count of all items which, because of their physical characteristics, cost, mission essentiality, criticality, and are designed specifically for individual identification and inventory control. Special material inventories include, but are not limited to, the items stocked designated classified or hazardous. inventories of special material also include the personnel and controlled silver presentation

Advantage Contr ol Inventory

Inventory Control gives you the ability to handle your inventory, your way. As one of the most flexible and comprehensive modules in Advantage, you can choose the level of control that best suits your specific business needs. Your inventory can be valued in one, LIFO or FIFO basis of average cost. You can choose to use parts explosions, serialized inventory, assignments, parts, vendors, warehouses and an audit trail. The system can also control the quantity sold for each item in the past 12 months, and this data provides a sales analysis report to help you better manage your inventory. Financing is aided by aged serialized report that shows which items were serialized in their inventory as long as you got into debt. Prices can be standardized by rounding for a particular factor or set to be a specific suffix. With the report under the minimum stock reordering is automatic and accurate. Inventory Control is an independent module that can also be integrated with the purchase Orders, Point of Sale, Billing / Order Entry, Cost of work, time billing and Quick Sale.
21 character alphanumeric item number field
Research on the item number, item description (21 characters) and group (15 characters) fields
Tracks serialized items
Allows replaced, preceded and other accessories
Unlimited descriptions can be added to items
Handles markup on cost and gross profit
It can automatically update the prices of items and discount
Handles core prices
Produces a report reorder quantities based on minimum stock
Tracks unlimited vendors per item, and recommends a "best" supplier
allocation of slots, including funding of explosion
Up to 254 discounts per item, including quantity break discounts
Unit conversions can be defined for each item both for purchase and sale of quantities
Allows transfers of stock and other adjustments amount
Set dates for the special discount sale item

Produces forms of physical inventory
Imports of physical inventory and the amounts received from data collected with handheld computers
Provides up to 255 levels of exploding parts so you can identify all the components of its stock mounted
Automatically updates cost and price on items of explosion-based subset changes
• Reports from the best and worst items for sale in each of eight different categories
• Items of location or quantity ranges in multiple warehouses
• You can automatically generate the items based on a model item
• Uses an early entry to facilitate entry of item data

Disadvantages:

• carrier needs to be decreased slightly to the movement of cash (one way);

• may require the addition of booster powered units in some applications;

• Can not be used for inter-floor movement except for travel down;

• The goods need to be pushed manually when horizontal;

• lack of positive control over the box in motion;

• produces a line when pressure builds up.
• Require efficiency of land

We propose a new method of assessment, recover and retrieve sets (products, components, parts, etc.) in production systems with reverse logistics. Sets of values influence their opportunity holding cost rates, and thus are essential for comparing inventory strategies, in average cost models. It is argued that the proposed method is "correct" from a discounted cash flow (DCF) point of view. We refer some previous results on sets in valuing systems without disassembly of returned products that seem to confirm this. In addition, we tested the method for a specific example with disassembly of returned products. The simulation results indicate that the method actually leads to (nearly) DCF optimal inventory strategies.

Packing

At Siemens, with its large product volumes, low margins and fierce competition, is constantly seeking improvements in the efficiency of their supply chain supplies. The supermarket retail industry uses an immense amount of packaging and is directly affected by packaging logistics activities. There is therefore a potential for improving efficiency in the retail food supply chain by integrating and developing new systems of packaging and logistics. manipulation packages are identified as one of the main activities that have a strong impact on the total cost of the logistics chain. This article investigates research methods of handling packaging evaluation and discusses how these are used to benefit the tobacco industry, have been used to evaluate packaging and logistics activities. This work, along with a review of the literature was used to identify the need for evaluation methods and the present availability of such methods. Results indicated a lack of sufficient and usable packaging handling evaluation methods in the supermarket today and packaging industry especially from a logistical point of view. The document also highlights the lack of systematization among the few methods used and discusses how these can be used to build an evaluation systematic and multi-functional model in order to use information from different studies to build a knowledge base for the future

-Vendor Managed Inventory

Siemens is a leading global manufacturer, with a focus on providing operational services for companies in high technology, needed to take advantage of suppliers Managed Inventory (VMI) and better compliance postponement solutions to stay competitive in the market of low-margin manufacturing. Your goal was to find ways to reduce redundant inventory, improve customer responsiveness, reduced cycle times and simplifying vendor management and administration contracts. The manufacturer also necessary to augment existing infrastructure, reducing investment 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, that automate the process of time management with Web-based software that allows the flow of supply more accurately mirror the store – and even on a shelf – demand.
Move your inventory in and out of our distribution centers and manage demand planning. We can store and stage of product for replacement in our often freeing limited or in warehouses. We provide estimates of visibility, comparing the actual demand from the DC-in-hand, shop-in-hand and inventory in transit. When the premises or stock falls below predetermined levels, auto alerts are sent to you and ask your supplier for replenishment.

Advanced Shipping Notices (ASNs) provide details about the inventory in transit from suppliers to give you a deeper inventory visibility in the supply chain. This allows confident commitment to orders based on this input stream.
Postpone inventory ownership until shipment to your site. Once your inventory is moved for that work with its suppliers to transition ownership of inventory until demand occurs.
We perform value-added services, allowing you more effectively manage the flow of goods in manufacturing 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, which automates the process of time management with Web-based software that allows the flow of supply more accurately mirror the store – and even on a shelf – demand.
Move your inventory in and out of our distribution centers and manage demand planning, with web-based applications. We can store and stage prod

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.

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