Problems and solutions to supply chain and inventory management

Supply chain inventory management is not a simple demand forecast and replenishment, but to improve customer service through inventory management and improve the level of revenues for the organisation. In this article, we will explore some problems and solutions to supply chain and inventory management

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The problems of inventory management under supply chain management mainly focus on information, supply chain operation, supply chain strategy and planning. These issues are manifested in the following:

The overall concept of supply chain management requirements has not been formed

Many supply chain management systems do not have the overall supply chain performance evaluation index, each node enterprise has its own way, resulting in the overall inefficiency of the supply chain.

Information transmission system is inefficient

Supply chain inventory management emphasizes collaboration and information sharing, demand forecasting, inventory status, production plan, etc. and are all important contents of supply chain inventory management. To respond quickly and effectively to customer needs, companies must accurately grasp the information distributed in the supply chain organisation in real time. At present, many organisations information transmission systems have not yet been established, and the customer demand information that suppliers learn is often delayed or inaccurate, making it difficult to implement short-term production plans. Therefore, we should establish an efficient information transmission system, effectively transmit the supply chain inventory management information, improve the supply chain inventory management performance.

Uncertainty in the supply chain

The reasons for the formation of supply chain inventory can be divided into two categories, one is the general inventory which is established because of the production operation, and the other is the insurance inventory established to guard against uncertainty in the supply chain. When making inventory plans, companies that cannot take into account the impact of uncertainties, such as market changes caused by fluctuations in demand, supplies caused by unexpected changes caused by the lack of stock, production interruption caused by unexpected events in the company, etc., will have an impact on inventory. Uncertainty is the main reason for companies to establish buffer inventory. Studying and tracking the impact of uncertainty on inventory is a major challenge in supply chain inventory management.

Lack of cooperation and coordination

The different functions in the supply chain are a whole, and they need the coordination and cooperation of the members in order to achieve the best operation results. However, the lack of mutual trust between teams will increase the difficulties of coordination and cooperation between functions. The lack of mutual trust between members is the root cause of the instability of cooperation in the supply chain organisation. Therefore, it is necessary to establish an effective supervision mechanism and incentive mechanism among members to promote communication and cooperation among them.

Product design does not take into account the impact of supply chain inventory costs

Modern manufacturing technology enables the production efficiency of company products to be greatly increased, so that gross margin is high. However, the complexity of supply chain inventory is often overlooked, so the costs saved in the production process are offset by distribution and inventory costs in the supply chain. At the same time, in the design of supply chain structure, the impact of inventory costs needs to be considered.

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Based on the characteristics of supply chain inventory management and supply chain inventory management problems, supply chain inventory management should be improved from the following aspects:

First, it is necessary to establish the overall concept of supply chain

In order to realize the cooperation of inventory management among supply chain members on the basis of ensuring the overall performance of the supply chain, it is necessary to analyze various direct or indirect factors, such as the common goal, common interests and value pursuit of supply chain organisation. On the basis of the efficient sharing of information, through the coordination of the efficiency indicators and evaluation methods of each function, the supply chain members can reach a consensus on inventory management, start from the overall situation, establish a “win-win” business philosophy, consciously coordinate mutual needs, and then establish a set of supply chain inventory management process, so that all participants in supply chain inventory management achieve consensus.

Second, the supply chain structure should be streamlined

The supply chain structure has an important influence on supply chain inventory management. The long supply chain and the complexity of the relationship between the nodes in the supply chain are one of the main reasons for the poor transmission of information in the supply chain and the high cost of supply chain inventory. Optimizing the supply chain structure is the key to ensure the smooth coordination of information transmission among the nodes of the supply chain, and it is the basis of supply chain inventory management. Therefore, we should try our best to develop the supply chain structure towards the flattening direction, streamline the number of nodes in the supply chain, and simplify the relationship between the nodes in the supply chain.

Finally, all links in the supply chain are effectively integrated

Integrated supply chain links, is based on common goals, each link will be formed into a “virtual organization”, through the organization members of information sharing, financial and material transfer, optimize the organization’s goals and overall performance. By integrating all links in the supply chain, we can overcome the effect of the oversupply inventory management system being too complicated on the efficiency of supply chain inventory management to some extent, and the supply chain inventory management data can be transmitted to each node in real time and quickly, so as to greatly reduce the supply chain inventory cost, respond quickly to customer demand, and improve the overall performance of supply chain inventory management.

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Problems and solutions to supply chain and inventory management