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INVENTORY MANAGEMENT

I NVENTORY MANAGEMENT

1. INTRODUCTION

Concept and Meaning

Inventory is a list of products and materials, or goods and materials themselves, held available in stock in a company. Inventory is maintained in order to manage and hide from the client, the fact that manufacturing supply delay is longer than delivery delay, and also to alleviate the effect imperfections in the production process that reduces production efficiencies stands production capacity 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 workstations against the possibility that the workstation can be deducted a little delay to provide the next step transformation. Although some processes carry very large stocks, Toyota moved to one (or few items) and now changed to eliminate this type of images.

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

Overproduction is held because the forecast and actual sales have not met. Making the order and JIT eliminates this type of material.

Lot delay stock is because a part of the process is designed to work on a base, while only the items of the batch processing basis. Therefore each item of the lot to wait for the whole lot to be processed before moving on to the next station. This can be eliminated by a single piece of work or a size a lot.

Demand stock flotation is performed when the production capacity is unable to flex with demand. Therefore, a picture is built in periods of lower use, to be delivered to customers when demand exceeds capacity. This can be eliminated by increasing the flexibility and capacity of a production line or reduced from the order of the load balancing level.
Line balance stock is held by different sub-processes in a line of work different rates. Therefore photograph will accumulate after a fast sub-process or before a very large size sub-process. Line balancing will eliminate this type of images.

Photo of change is carried out after a sub-process that has a long setup or changeover time. This stock is then used as the transition is happening. This stock can be eliminated by tools like SMED.

When these units contain the same or similar items is often the practice of work do all this mixed together before or after the sub-process to which they relate. This 'reduces' costs. Because they are mixed together for visual reminder to operators of the adjacent sub-processes or management of online material that is due to a specific cause and should be responsible of a particular individual, with inevitable consequences. Some plants have centered photograph holding in sub-processes which makes the situation even more acute.

The basis of accounting inventory

Inventory should be counted in that is held across boundaries of time generally accounting for expenses should be compared with the results of that spending in the same period. When the procedures were simple and short, so stocks were small, but with more complex processes, then inventories become more valued and significant balance sheet items. The need for value of goods sold and incomplete led many new behaviors into practice management. Perhaps the most significant of these are the complexities of the recovery of fixed costs, transfer pricing, and the separation of direct from indirect costs. This supposedly deleted "the anticipation of income" or "declaration of dividends out capital. "One of the intangible benefits of Lean and TPS that the process times and reduce inventory levels decline to the point where the importance of this activity is extremely low and therefore the effort, especially management, to achieve it can be minimized.

V LIFO / FIFO S

When a trader sells goods from inventory, the value of inventory reduces the cost of goods sold (CoG sold). This is simple, where the CG not has varied between detainees in stock, but if you have a method agreed upon should then be derived. For items of a commodity that can not control individually, accountants must choose a method that fits the nature of the sale. Two popular methods exist: FIFO and LIFO accounting (first in – first out, last – first out). FIFO As regards the first unit, which arrived in one of the first inventory sold. LIFO considers the last unit arriving in inventory as the first one sold. Which method an accountant selects can have a significant effect on net income and net worth and, in turn, on taxation. Using LIFO accounting for inventory, the company generally reports low net income and the lowest value because of the book the effects of inflation. This usually results in lower taxes. Due to the LIFO the potential to distort the inventory value, UK GAAP and IAS have effectively banned LIFO inventory accounting.

SUPPLY CHAIN MANAGEMENT

The supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, processing of materials into intermediate and finished products, and distribution of these finished products to customers. Supply chains exist in both services and organizations manufacturing, although the complexity of the chain can vary widely from sector to sector and from company to company.

Supply chain management is usually seen to be among vertically integrated companies, where the entire material flow is owned by a single company and those where each channel member operates independently. Therefore coordination between the various actors in the chain is crucial to its effective management. Cooper and Ellram [1993] compare the management of the supply chain of a well-balanced and well-practiced relay team. This team is more competitive in that each player knows to be positioned for hand-off. Relationships are the strongest among the agents that directly pass cane (stick), but the whole team must make a concerted effort to win the race.

Below is an example of a supply chain very simple a single product, where the raw material is purchased from suppliers, 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 not is always along an arborescent network, various modes of transport can be considered, and the list of materials for the end points can 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 products, information and even flow of all operations through the loop. However, management of the supply chain can be a very difficult task, because in fact, 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 can vary greatly from sector to sector and from company to company.

Unlike commercial supplies manufacturing, services such as planning clinical supplies are very dynamic and can often have changes in last hours. Availability kit patient when the patient arrives at the site of the researcher is very important to the success of the trial. This results in overproduction of drugs to take care of last-minute change in demand. Manufacturing R & D is very expensive and overproduction of patient kits adds significant cost to the cost global clinical trials. An integrated supply chain can reduce the excess production of drugs for effective demand management, planning and management inventory.

Traditionally, marketing, distribution, planning, production, and purchasing organizations along the chain supply operated independently. These organizations have their own objectives and these are often conflicting. Target marketing service client high and maximum sales dollars conflict with the goals of manufacturing and distribution. Many manufacturing operations are designed to maximize productivity and reduce costs with little regard to 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 organization — There were as many business plans. 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 control of operations of the supply chain in order to meet customer needs as efficiently as possible. Chain management supply covers all handling and storage of raw materials, work in process inventory and finished goods from point-of-origin to point of consumption.

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

A trade association has developed a definition in 2004, Supply Chain Management "comprises the planning and management of all activities involved in sourcing and procurement, conversion, and all management activities logistics. "Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service of outsourced services and customers. In essence, Supply Chain Management integrates supply and demand within and between companies.

Cohen & 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 these organizations are dependent on each other but not traditionally cooperate closely with others. An integrated management of the supply chain speeds 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 system "approach to managing the entire flow of information, materials and services from suppliers of raw materials through factories and warehouses to the end customer. "

Event management of the supply chain (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 the management of supply chain management and logistics, while others consider the terms to be interchangeable. From the standpoint of a company in managing the supply chain is often limited on the supply by suppliers of their supplier and customer side to customers of his client.

Chain management is also a category of software products.

SIEMENS 2.

Siemens is one of the largest companies in the world and Europe's largest engineering company. Siemens has six main business divisions: communication and information; Automation and Control, Power, Transportation, Medical, and Lighting. Siemens international headquarters is located in Berlin and Munich, Germany. Siemens AG is listed on Frankfurt, 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 recorded sales overall € 87,325 billion in fiscal 2006

HISTORY

The firm was founded by Werner von Siemens on October 1 1847, based on the telegraph was invented that used a needle to point to the sequence of letters, instead of using Morse code. The company – then called Telegraphen-Bauanstalt von Siemens & Halske – opened its first workshop on October 12.

In 1848, the company built the first telegraph line long distance in Europe, 500 km from Berlin to Frankfurt am Main. In 1850, the founder of a younger brother, Sir William Siemens (born Carl Wilhelm Siemens), started to represent the company in London. In the 1850s, the company was involved in building networks of long distance 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) telegraph line.

In 1881, Siemens AC Alternator driven by a water mill was used to power the lighting of the world's first electric street in the town of Godalming, United Kingdom. The company continued grow and diversified into electric trains and light bulbs. In 1890, the founder retired and left the company to his brother Carl and sons Arnold and Wilhelm. Siemens & Halske (S & H) was incorporated in 1897.

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

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

Before World War Worldwide, Siemens has been involved in the secret rearmament of Germany. During the Second World War, like most large companies in Germany, at the same time, Siemens supported the regime Hitler, contributed to the war effort and participated in the Nazification of the economy. Siemens had many factories in and around famous extermination camps as Auschwitz and used slave labor in concentration camps to build electric switches for military uses. In one example, almost 100,000 men and women of Auschwitz worked in a Siemens factory inside the camp, the supply of electricity to the camp.

In the 1950s and his new base in Bavaria, S & H started to manufacture computers, semiconductor devices, washing machines, and pacemakers. Siemens AG was incorporated in 1966. The first company digital telephone exchange was produced in 1980. In 1988, Siemens and GEC acquired the UK's defense and technology company Plessey. Plessey farms were divided and Siemens took over the avionics, radar and business traffic control – such as 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 decided to sell the defense arm of the Siemens Plessey British Aerospace (BAe) and a British government agency, the Defense Analytical Services Agency (DASA). BAe and DASA acquired the British and German division 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 was part of Fujitsu Siemens Computers AG in that year. The group's retail banking technology became Wincor Nixdorf.

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

November 2005, Siemens signed a 12-year deal with the Walt Disney Company to sponsor their park attractions in Florida and California.

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

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

In April 2007, the fixed networks, mobile networks and services Carrier Divisions of Siemens merged with Network Business Group of Nokia, in a 50/50 joint venture, the creation of an enterprise network and mobile called Nokia Siemens Networks. Nokia delayed the merger, due to investigations of bribery against Siemens.

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

MAIN CUSTOMERS SIEMENS

-KCR
-Novartis
-Edmonton Transit System
-Calgary Transit
-Deutsche Bahn AG (railway undertaking german)
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)
Platform for Telecommunications Services, the TSP 7000
Combine electrical, ULF, and Avanto
-Siemens-Duwag U2 LRV
Er20 locomotive – MTR
March -LHB/Siemens M1/M2/M3 Metro Pair
Siemens-Adtranz LRV
-Duewag/Siemens 1435 millimeters Combino Low Flr LRV
MX3000-car Metro Oslo (SGP Wien works)
Metro-S4000
ABB -Schindler/Siemens Be 4 / 8 Low Floor LRV
Metro-5001
SWBSiemensr-NGT 6D LRV
Locomotive Eurosprinter
Desiro trains, ICE, and Transrapid
-Gigaset, Home entertainment products, including Gigaset M740 AV, a set-top box to receive DTT-and integrate it on a home network (wired or cable), or for home streaming media.
E-Hicom Trading
Hicom-300
HiPath –
-HiQ 8000 Softswitch
-MSR32R
EWSD telephone exchanges
SPX-2000 digital PBX small (rural)
Siemens Gigaset cordless phones
Siemens Mobile Phones – the BenQ to sell in 2005
Siemens SPPA-T2000 Control System (formerly Teleperm XP)
Siemens SPPA-T3000 Control System (for Electric Power Generation Control)
-SIMATIC PCS 7 Process Automation System for Process and Hybrid industries
-Radio and essential products for 2G and 3G Mobile Networks (GSM, UMTS, …)
-Gas & Steam turbines
Industrial programmable controls (including Simatic PLC, and Logo! Microcontrollers)
-The 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-TRuepoint PET.CT
RM-Magnetom C!, An open field of low
-Magnetom Avanto, a system Tim MRI
-Magnetom Espree, a Tim system, open bore MRI
-Magnetom Trio, A Tim System, ultra high-field MRI
-Windturbines, 1.3 MW, 2.3 MW, 3.6 MW
-Sinorix (TM)
-Sistore (TM)

Main competitors of Siemens are:

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

3. OBJECTIVES AND NEED Supply Chain Management

Traditionally, marketing, distribution, planning, production, and organizations purchase along the supply chain operated independently. These organizations have their own objectives and these are often conflicting.

Target marketing to customer service and high maximum sales dollars conflict with the goals of manufacturing and distribution. Many manufacturing operations are designed to maximize production 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 business plans. Clearly, there is a need for a mechanism by which these functions different can be integrated together. Supply chain management is a strategy through which such integration can be achieved.

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

In addition to reducing costs, managing supply chain approach also facilitates customer service improvements. It enables the management From:

– Inventories
– Transport systems and
– Joint distribution networks

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

The main objective of managing the supply chain is to reduce or eliminate the shock-stock that exists between the origins chain by sharing information on demand and current inventory levels.

In general, an organization requires an adequate and effective system of supply chain management so that the following strategic areas and competitive can be used to its full advantage if a management system supply chain is properly implemented.

1. Compliance with the raw materials:

Ensure the exact amount of parts for the production or sale of products arrive at the right time. This is enabled through efficient communication, ensuring that orders are placed with the appropriate amount of time available to be filled. The system of chain management also allows a company to constantly see what is in stock and make sure that the quantities law are ordered to replace stock.

2. Logit

The cost of transporting materials as low as possible, consistent with safe and reliable delivery. Here, the management of the supply chain system enables a company to have constant contact with his team of distribution, which could consist of trucks, trains, or any other mode of transport. The system may allow the company to track where the materials are needed in all times. Well, it may be profitable to share transportation costs with a partner company, if the transfers are not large enough to fill a truck world and this time, allows the company to make this decision.

3. Smooth Production:

Ensuring production lines function without problems, because 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 within the requested time, production will stop, but having an effective system chain management 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 flexibility a company to respond to unexpected changes in demand and supply. Because of this, the company has the capacity to produce goods at lower prices and distribute them to consumers faster then the companies without management of the supply chain, thus increasing the overall profit.

5. Cost savings:

Keeping the cost of parts and products purchased at acceptable levels. Supply chain management reduces costs by increasing inventory turnover on the floor of the store and warehouse control product quality, reducing the costs of internal and external errors and working with suppliers to produce the most efficient way to manufacture a product.

6. Mutual success:

Among the partners in the supply chain ensures mutual success. Collaborative Planning, Forecasting and Replenishment (CPFR) is a long-term commitment, working together for quality and support by the buyer of supplier management, technological and capacity development. This relationship allows the company has access to current and reliable information, get inventory levels, reduce lead times, improve product quality, improve accuracy prediction and, ultimately, improve customer service and overall profits. Suppliers also benefit from the cooperative relationship through the entry buyer increased from suggestions on improving the quality and cost savings while shared. Consumers can benefit as well as through high quality products supplied a lower cost.

4. ACTIVITIES / FUNCTIONS OF SMC, SIEMENS

Supply chain management is a functional approach to management the movement of raw materials into an organization and the free movement of finished goods out of the organization to the final consumer. Companies strive to focus on core competencies and become more flexible, which have reduced their share of renewable 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 consumer demand satisfied, while reducing management control of daily logistics operations. Less control and more supply chain partners supply led to the creation of concepts of supply chain management. The objective 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.

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

(a) Strategic: —

Optimization of strategic networks, 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 others 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.

Production decisions, including contracts, local programming and the the planning process.

Inventory decisions, including quantity, location and quality of inventory. Transport Strategy, including the frequency, routes and contracting.

Comparative analysis of all operations against competitors and implementation of best practices throughout the company.

(c) Operation: –

Journal-production and distribution planning, including all nodes of the supply chain.

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

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

Planning of supply, including current inventory and demand forecasting, in collaboration with all suppliers. Entry operations, including transportation from suppliers and receiving inventory.

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

Output operations, including all activities transport and customer service.

-Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing plants, distribution centers, and other customers. Tracking performance of all activities.

Integrated Supply Chain MANAGEMENT

An integrated management of the supply chain streamlines processes and increases profitability by offering the right product at the right place on time, and at the lowest possible cost. Unlike commercial production supplies, planning clinical supplies is very dynamic and can often have changes in the last minute. Availability kit patient when the patient arrives at the site investigator is very important to the success of the trial.

This results in overproduction of medicines 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 medicines demand for efficient management, planning, and inventory management. Implementation of ERP (including SAP) in R & D may have a higher return by offering efficient and a system of inventory management and also reducing over-production.

How-Integration is achieved in Supply Chain?

Phase 1

Complete functional independence in which each business function such as production or acquisition do your own thing in isolation due to other business. For example, the production function seek to optimize the unit cost production for the production of long runs to account for the accumulation of finished goods inventory and advance it will impact on the deposit and capital.

Phase 2

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

Stage 3:

A natural extension 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 to customers. It represents true integration of the supply chain. This concept is also called "Co-Managed Inventory (CMI).

Force management of the supply chain of trust and cooperation and the recognition that is properly controlled "the whole cane, then be greater than the sum of its parts'.

Inventory Decisions:

Refer to the means by which inventories are managed. Inventories at each stage of the supply chain, both of raw materials, semi-finished or finished products. They can also be in process between locations. Its primary objective the protection against any uncertainty that may exist in the supply chain. From the inventories can cost between 20 to 40 percent of their value, their efficient management is essential in operations of the supply chain. It is the long term by establishing targets for top management. However, most researchers have approached the inventory management of short-term perspective. These include deployment strategies (push versus pull), control policies — the determination of optimal levels of order quantities and reorder points, and security configuration inventory levels at each stocking location. These levels are important because they are primary determinants of levels of customer service.

5. INVENTORY CONTROL MANAGEMENT

Inventory Data

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

The task of inventory planning can be highly complex. At the same time, it rests on the fundamental principles. In doing so we need to understand and determine the optimum batch size has to be ordered. The EOQ (economic order quantity) refers the ideal size to result in lower total order and transport costs and the costs order. In calculating the amount of economic order the company tries to determine the size that will minimize total inventory costs. In examining the two curves shows that the cost curve of transport is linear, ie, more inventory held at any time, higher the cost of holding it. Ordering cost curve, on the other hand is different. Sort lower costs with an increase in order sizes. The point where the curve of operating costs ie the curve of transport costs and the cost curve ordination meeting, represent the lowest total cost which, incidentally, is the amount economic or the ideal amount.

PRODUCTIVITY

In industry, there will be a competitor who is a producer of low cost and have higher sales in the sector. This is partly due to economies of scale that allow the fixed costs over a larger volume, but more particularly the impact of the experience curve.

You can identify and anticipate improvements in the rate of output of workers, they become more skilled the processes and tasks in which they work. Bruce Henderson extended this concept, demonstrating that all costs, not only production costs, would fall into a certain rate swelling. This cost reduction applies only to the value added, ie, other costs that bought the supplies. Traditionally it has been suggested that the main towards cost reduction has been gaining more sales and there can be no doubt about the close link between market share and relative costs. However should also be recognized that logistics management can provide a multitude of ways to increase efficiency and productivity and hence contribute significantly reducing unit costs.
In today's environment is more turbulent, there is no longer any possibility of manufacturing and marketing of act independently of each other. It is now generally accepted that the need to understand and meet the requirements of the customer is a prerequisite for survival. At the same time, in search of better cost competitiveness, production management has been the subject of massive revival. The last decade has seen the rapid introduction of flexible manufacturing systems, new approaches to inventory based on material requirements planning (MRP) and Just In Time (JIT) methods, an emphasis continuously on quality.
It also has been a growing recognition of the role it plays in the acquisition to create and sustain a competitive advantage as part an integrated logistics process.

In this scheme of things, logistics is therefore essentially an integrative concept that aims to develop a system broad view of the company. He is fundamentally a planning concept that aims to create a framework with the needs of manufacturing strategy and plan, which in turn link to a strategy and plan of acquisition.

Inventory Flow:

The management of logistics is concerned with handling and storage of materials and finished products. Logistics operations begin with the initial loading of a material or component of 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 logistics process adds value. By moving the inventory when and where needed. Thus, the material gain value at each step. For a large manufacturer, logistics operations can consist of thousands of movements, which lead delivery of the product to an industrial user, wholesaler, distributor or customer. Likewise for a retailer, logistics operations can begin with the acquisition products for resale and may end with consumer pickup or delivery.

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

INVENTORY related costs

Inventorying cost (ICC):

-Taxes
-Storage
Capital
Seguro
Obsolescence
-Ordering:
-Communication
-Processing, including material
handling and packaging
Upgrade activities, including
-receiving and data processing

Basic Inventory Decisions

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

RELEVANT Inventory Costs

Item costs, expenses Holding, Ordering Costs Costs, scarcity,
The direct cost to purchase an item. Acquisition cost for orders outside of manufacturing costs to internal orders. Costs associated with the achievement items in stock. Storage and other related costs. The fixed costs associated with placing an order (or purchase cost for orders from outside, or an installation cost for domestic orders). The costs associated with not having sufficient 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, the demand may vary from day to day. If the demand is not known in advance, the model must be modified through the inclusion of security actions.
2. Pris constant EOQ model assumes that the purchase price per unit of material will remain unchanged, regardless of the order offered by suppliers to include the variable costs resulting from volume discounts, the total cost of the EOQ model can be redefined.
3. Constant unit transportation costs, transportation costs can very substantially as the size of the inventory increases, perhaps due to decreasing economies of scale and efficiency of storage and increase storage space is exhausted and new premises must be rented.
4. Cost-ordering constant this hypothesis is generally valid. However, any violation of this can be accommodated by modifying the EOQ model in a manner similar to that used for the unit price variable.
5. Instantaneous delivery to delivery is not instantaneous, which is usually the case, the original EOQ model must be modified by including a safety stock.
6. Orders Independent is the result of multiple orders cost savings by reducing paper work and transport costs, the original EOQ model should be further modified. Although this change is a little complicated, EOQ models have been developed to deal with it.
These assumptions have been indicated to illustrate the limitations of the basic EOQ model and the ways it can be easily modified to compensate for 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 the inventory
S = is the unit price of an item.
Limitations of the EOQ formula —
1. Erratic changes uses, the formula assumes the use of material is predictable and evenly distributed. When this is not the case, the formula becomes useless.
2. Faulty basic information order cost varies from commodity to commodity and transportation costs may vary according to the company's cost of capital opportunity. Thus assumption that the cost of ordering and the cost of loading remains constant is defective and therefore EOQ calculations are not correct.
3. Expensive calculations: the calculations needed to find EOQ is extremely time consuming. More elaborate formulas are even more expensive. In many cases, the cost of estimating the cost of ownership and acquisition and EOQ calculation exceed the savings by purchasing this quantity.
4. No formula is a substitute for common sense, sometimes the EOQ may suggest that for a given product each week (six years' supply), based on the assumption that we need it at the same rate for the next six years. But we have to order it in the quantities according to our trial. Some items may be ordered each week, some may be ordered monthly, depending on how it is feasible for the company.
5. EOQ ordering must be tempered with trial Sometimes guidelines provide a conflict in order. Where a strategy to conflict with an operational objective, the constraints strategy should be developed for honoring the goal.

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

Cost the realization of inventory:

Carrying material in stock is expensive. Several studies indicate that the annual cost of conducting an inventory average production approximately 25% of the inventory. The escalating and volatile costs of 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 loading of costs (20% – 40%)

Let's briefly consider these costs:

Opportunity cost funds invested

When a company uses the money to buy production equipment and maintains the inventory, it simply has that money and much less to spend on other purposes. The money invested in foreign securities or production equipment get a return for the company. It is therefore logical charge all the money invested in stock an amount equal to what would be made elsewhere in the company. This is the opportunity cost associated with inventory investment.

Insurance cost

Most companies insure the goods against possible losses arising from fire and other damage.

Taxes estate

This is charged on the commercial value of the assets of a company, the greater the value of the inventory, the greater the value of the assets and therefore largest tax bill of the company.

Storage costs

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

Obsolescence and deterioration

Most inventory operations, a certain percentage of the spoils of stock, is damaged, stolen or is eventually becomes obsolete. A certain 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 inventory level.

ABC classification:

Indicators that a material classified as an A, B or C according to its value consumption. The rating process is known as the ABC analysis.
The three indicators have the following meanings:
-The important part, the value high consumption
B-less important, the average value of consumption
C-relatively unimportant, low consumption

The classification system ABC is to group items according to annual sales in an attempt to identify the small number of items that will be responsible for the bulk of sales and that are 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 (for the rate of demand (days, weeks, etc.), and L = lead time.

Safety Stock Inventory remaining between the time a request is made and when new stock is received. If there are enough stocks, then a shortage may occur.
Stocks security is a hedge against the inventory. It is an extra inventory to meet unexpected events. It is often called the reserve. Absence inventory is called scarcity.

ABC Inventory Classification

The rating process is ABC an analysis of a series of items such as finished products or customers into three categories: A – exceptionally important; B – for medium, C – for unimportant, as the basis for a control scheme. Each category can and sometimes should be treated differently, with more attention being devoted to category A, unless B and below C.

Inventory Control Application: The ABC classification system is the grouping of items according with annual sales volume in an attempt to identify the small number of items that will be responsible for the bulk of sales and which are most important to the management control inventory efficiently.

Break-even analysis depends on the following variables:
1. Selling 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 vary as production increases or decreases, until the costs of new capital are needed.
3. Variable unit cost: Costs that vary directly with the production of an additional unit.
Variable Cost Total proceeds from the expected unit sales and variable unit cost, ie expects sales of units times the unit cost variable.
4. Its net profits: total revenue minus total cost. Enter zero (0) if you want to know number of units to be sold in order to produce a profit of zero (but will recover all costs)

Balance 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 that the product stops costing you money to produce and sell, and starts to generate profit for your company.
where:
Q = Break-even point, ie, plants (Q),
FC = Fixed Costs,
CV = variable costs per unit
UP = Unit Price
Therefore,
Equilibrium Q = Cost fixed / (Unit Price – Unit Variable Cost)

Stock control and inventory

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

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

Supply chain inventory vendor management:

Allows partners in the supply chain of parts of critical order, demand and inventory information in time real and uses both integrated and web-based applications to reduce administration costs, shortening cycle times and help lower levels of stock. Our single, central supply managed requires little initial investment, but soon begins to deliver high performance in real time

Inventory Control

Normal Inventory

As it seems, this type of inventory item is used for most of its parts. It will properly manage the stock received and sold on a first first base, will deal with cost of sales, and will warn you when you are out of stock.

Inventory Non-Type

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 inventory control over it. As well, not no cost adjustments to the sale of stock items. The system will not calculate how much you paid for the item, and therefore do not attempt to remove the value of the stock ledger. If you're selling something that costs you money, you have to deal with this data manually.

Labor Parts

You (probably) do not have technical hanging from hooks in his room back, as well as non-inventory items, the system will not try to remove them from inventory when you sell an item of work. The two differences between the non-items, an inventory of work are items that you can optionally have the will ask the technical code that did the work so that you can print reports showing who did the work. And, optionally, the system will ask a comment to explain what was done to the job description of services 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 basis. At the end of the month, then you can print reports of technical productivity to compare the total time spent compared to hours worked. In the automobile industry, some mechanics can do the job faster than the is charged because the billing is based on industry standards.

Consignment Items

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

Plant Inventory

Floor plan is very similar to that assignment, except that you take possession and own inventory when you receives it, but you do not have to pay for it until it is sold, or until it is in storage for a period of time negotiated. However, you have stock and have to pay for it some day.

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

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

Take Inventory

Windward System Five has the ability to classify and categorize tires by size, aspect ratio and size of the rim. In addition, you will also be able to search the system can sort the list to display items with high quantity in stock at the top of the list and which items are out of stock at the bottom of the list. This will help you sell what you actually have to sell than creating special orders.

Product Inventory

The products are items like vehicles you can service or repair 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 saws. The system will you keep information about these products, such as make, model, year and other observations, and also be able to list all jobs or repairs performed between two dates.

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

Serialized Inventory

These items that need to be controlled by their series numbers can be marked as serialized inventory. For example, refrigerators, stoves, computers and all the saws can be serialized. Note that if you is looking forward to seeing these items in the future and keep track of all the work you do on them, should be entered as products rather than numbers.

TYPES OF INVENTORY

Several different types of inventories are conducted, depending on the type of material involved and the type of necessary information. Bulkhead-to-bulkhead inventory

A screening for the bulkhead inventory is a physical count of all the material inventory within the ship or within a buffer storeroom.A specific inventory of screening for a specific deposit is given when an inventory of random sampling dump that does not meet the inventory accuracy rate of 90 percent when driven as a result of an inspection of the supply management (SMI). Also taken when directed by the commander or when the circumstances clearly indicate that it is essential for effective inventory control.

Inventory of goods specific

The inventory of specific goods is a physical count of all items under the symbol of knowledge itself, FSC, or the same function of operational support, such as saves boat, electron tubes, boiler tubes, or fire brick. This inventory is taken under the same conditions, as a screen for inventory bulkhead, but prior knowledge of the number of specific actions and location item is required to make an inventory specific commodity

Special Inventory material

A special material inventory requires the physical count of all items that due to their physical characteristics, the costs of mission essentiality, and criticality, are specifically designed to identify individual and inventory control. Inventories of specialty include, but are not limited to, items stocked classified or designated as hazardous. Inventories special material also include controlled equipage and presentation silver

Advantage Inventory Contr ol

Inventory Control gives you the ability to deal with your inventory of your way. As one of the most flexible and comprehensive modules in the advantage, you can choose the level of control that best suits your specific needs business needs. Your inventory can be valued on LIFO, FIFO or average cost. You can choose to use parts explosions, serialized inventory, parts, functions, suppliers, warehouses and an audit trail. The system can also monitor the amount sold of each item for the last 12 months, and this data provides a report of sales analysis to help you better manage your inventory. Financing is aided serialized by age report that shows which items have been serialized in your inventory as long as you have in debt. Prices can be standardized by rounding for a particular factor or be defined as a specific suffix. In the report below minimum, the actions of reordering is automatic and accurate. Control Inventory is a stand-alone module that can also be integrated with Purchase Orders, Point of Sale, Billing / Order Entry, job cost, time billing Quick and Venda.
21-number field alphanumeric item
Research on the number of items, item description (21 characters) and group (character 15) fields
Tracks serialized items
Allows replaced, preceded and replacement items
Overview Unlimited can be added to items
Handles markup and cost basis of gross profit
Items can automatically update prices and discounts
Handles core prices
Produces a report re-order quantities based on minimum stock
Tracks unlimited vendors per item and recommends a "best seller '
Allocations tracks including funds explosion
Up to 254 discounts per item, including breaks for quantity discounts
Unit Conversions can be defined for each item, both purchase and sale of quantities
Allows transfers of stock and other adjustments amount
Set the dates of a sale item for the discount

Produces forms of physical inventory
Imports of physical inventory and received amounts of data collected with handheld computers
Provides up Levels of 255 parts explosion, which allows you to identify all components of your mounted photograph
Automatically updates cost and price items explosion based on subset changes
• Reports best and worst points of sale in each of eight different categories
• Items Loved the location or quantity in multiple warehouses
• You can automatically generate items based on a model item
• Use Rapid Entry to facilitate the entry of item data

Disadvantages:

• air needs to be shrunk slightly to the movement the box (one copy);

• may require the addition of building units developed in some applications;

• not be used for inter-floor traffic, except for travel;

• goods must be manually pushed when horizontal;

• lack of positive control on the movement of cash;

• produces line pressure when accumulating.
• Require efficiency of land

We propose a method of evaluating the new recoverable, and recovered sets (products, components, parts, etc.) in production systems with logistics reverse. Values of the meetings influence the opportunity cost of holding rates and are therefore essential to compare strategies inventory average cost models. It is argued that the method proposed point is 'correct' from a discounted cash flow (DCF), the point of view. We we refer to some previous results on the recovery of joint systems without disassembly of returned products, which seem to confirm this. In addition, we tested the method for a specific example, the disassembly of returned products. The simulation results indicate that the method actually leads to (nearly) DCF strategies stock ideal.

Packaging

At Siemens, with its high-volume, low margins and fierce competition, is constantly seeking efficiency improvements in its supply chain. The retail sector of the food uses a huge amount of packaging and is directly affected by logistics activities of packaging. There is therefore a potential for improving the efficiency of the food supply chain through retail integration and development new systems of packaging and logistics. Handling of containers identified as one of the main activities that have a strong impact on the overall cost of the logistics chain. This article presents an investigation of packaging handling evaluation methods and discusses how these are used to benefit the industry sector, have been used to evaluate the activities of packaging and logistics. This work, along with a review of the literature was used to identify the need for evaluation methods and the current availability of such methods. The results indicated the lack of sufficient and usable packaging handling methods in the evaluation supermarket today and packaging industry especially from a logistical point of view. The document also highlights the lack of systematization among the few methods and discusses how these can be used to build a systematic and multi-model, in order to use the 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 high technology companies needed to take advantage of suppliers Managed Inventory (VMI postponement) and great service solutions stay competitive in its market making low-margin. His goal was to find ways to reduce the redundancy of inventory, improve customer responsiveness, reduced cycle times and streamline supplier management and contract administration. The manufacturer also needed to increase the 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, automate the management process for predicting Web-based software that allows the supply flow more accurately mirror shop – and even shelf – the level of demand.
Move your inventory in and out of our distribution centers management and demand planning. We may store and product stage for replacement in our often releasing or limited storage rooms. We provide forecast visibility, comparing the actual demand from the DC-in-hand, store-to-hand and in transit inventory. When storing or stock falls below the predetermined auto alerts are sent to you and your provider to request resupply.

Advanced Shipping Notices (ASNs) provide details of stock in transit from suppliers so you have more visibility to inventory in the supply chain. This allows confident commitment to orders based on this input stream.
Delaying the possession of the inventory until shipment to your site. Once your inventory is moved to what we work with suppliers to transition ownership of inventory until demand occurs.
Play value-added services, which allows you to manage more efficiently the flow of goods for 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, we can automate the management process for predicting Web-based software that allows the flow of supply more need mirror shop – and even shelf – the level of demand.
Move your inventory in and out of our distribution centers and management planning demand 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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