2011 International Conference on Information Management, Innovation Management and Industrial Engineering
Study on Auto enterprise inventory management
Zhang Guirong
Shandong Jiaotong University
Jinan, China
e-mail: zgr6933@163.com
Abstract—This paper aims at solving the following problems:
our country autocar business inventory managment,
unreasonablesupply chain inventory managment mode of
cooperation , unreasonablevibrator type recifier the network,
imappropriate new technique information technique and
physical distribution, physical distribution system reaction
capability scarcity and all the components purchased by the
storekeeper according to his mastery of the stock. This paper
puts forward a series of measures like a total inventory
management, strengthening production management and
lowering in products inventory, strengthening the marketing
management to reduce inventory, strengthening the whole
coordination of enterprise and countermeasures to improve the
management inventory level.
Keywords-Car companies; Inventory management; Strategies
I. INTRODUCTION
Most of our big car manufacturing enterprises use water
line production, which set strict rules on the supply time and
quality of auto parts. While the transportation companies,
due to traffic, vehicle arrangement, the personnel,
scheduling, and even the weather and the influence of
various factors, can't guarantee to meet the strict demands of
the car manufacturers, therefore, car makers’ reliability on
the transportation companies is very low. And, at present in
our country, these professional transportation companies
focus on vehicle transportation, vehicle distribution of
service while the service for car spare parts supply is less.
Under this condition, a Chinese car manufacturing
enterprises mode was born — the warehouse is stripped out
of automobile manufacturing enterprise to form independent
individuals, the so-called "storage center".
It can internally ensure the high quality parts supply to
the original auto manufacturing enterprise, and can provide
the distribution of other car enterprise and storage business,
in a way of the third party logistics operation. But this new
logistics management mode is still in research and
continuous improvement stage, how to make their
management and informationization level to achieve optimal,
become the type enterprise survival and development of the
key questions. Therefore, this paper is based on the analysis
of the present situation of storage center of the car
companies, the management mode and method of
optimization and optimizing of the shortcomings of the
management information system so as to improve the
management level of enterprises and the informatization
level.
978-0-7695-4523-3/11 $26.00 © 2011 IEEE
DOI 10.1109/ICIII.2011.191
Mu Yuxin
Shandong Jiaotong University
Jinan, China
e-mail: myxthomas@126.com
II. THE MAIN STOCK PROBLEMS IN CHINA'S AUTOMOBILE
ENTERPRISE
A. The stock management problems in the enterprise
external supply chain
(1) The supply chain stock management cooperation
pattern is not reasonable
(a) In the supply chain, the business model between
enterprises and the cooperation relationship is not strategic.
Nowadays, the domestic automobile manufacturing
enterprises manage their stock by themselves. Due to their
own interests, some of the key information can't be shared,
which caused problems like blocked logistics, excessive
stock and huge stress. Besides, based on their own interests,
the dealers fake or sugar up the actual sales information,
leading to the manufacturing enterprises’ slow response to
the actual demand of market, which results in the stock
structure disorder and overage cars.
(b)The supply network is not reasonable
Suppliers’ mistakes in the selection link lead to deformity
in the automobile manufacturing enterprises’ supply network
distribution. The uneven delivery ability of suppliers caused
the quality defects of key parts, long purchase cycle, and
difficulties in providing supporting parts. Moreover, the
enterprises’ own limited logistics operation level caused
huge stress in the current stock of spare parts.
(2) Supply chain memSupply chain members extrude
each other
In the supply chain of cars, upstream and downstream
nodes extrude mutually, strong nodes extrude vulnerable
nodes, and similar nodes extrude mutually. In cooperation,
they all try to raise the price, lower their costs and transfer
the risk, and finally form the mutual extruding of profits and
living space. The bad cooperation relationship between
members leads to the crisis of confidence.
(3) The application of information technology and
logistics new technology is improper and the response ability
of the logistics system is insufficient. The insufficient
logistics system response ability forced the enterprises to
make up the defect with a high inventory and meet the
production requirements.
B. The enterprises’ internal inventory management
problems
(1) Enterprises’ improper link in every operation link
leads to the inventory problem. For example, the improper
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link of the new product development project and the
corresponding procurement procedures can cause the
following problems: (a) The procurement comes earlier than
the project progress, causing a large inventory; (b) The
procurement comes later than project progress, so that the
project cannot go on as planned and the new products cannot
be put on the market on time. (c) In the old and new product
replacement link, because the switching of products involves
arrangement of the production schedule, matching purchase
and marketing, in operation, it may cause the backlog of old
parts, slow circulation, and reduction in inventory turnover
rate.
(2) The storage center performs unified management to
the parts. All the parts regardless of being primary or
secondary are managed according to the unified purchase
principles, ordering standards and storage requirements. This
kind of unified management requires more manpower,
money, but the effect is often far from satisfactory.
(3) The purchase requirements are made by the
warehousemen’s information of the storage of all the parts.
The usual result is that sometimes the storage of some of the
parts is too high, increasing the inventory cost; Sometimes
the storage of some of the parts is insufficient, influencing
the normal operation of the production line and causing great
damage.
(4) There are lots of problems in the enterprises’
production system. A car is an integration of many links, so
the smooth logistics operation and high quality products
need each link to cooperate closely with one another. Any
fracture in any links could lead to the failure of the whole
process. In order to avoid equipment failure, product quality
defects, employee absence, and incoherence in production
links, enterprises set large inventories in between every link
to gain time for buffer. When the automobile production
process inventory accumulated in the links, it formed a
significant quantities of in-process inventory.
III. STRATEGIES FOR AUTO ENTERPRISE INVENTORY
MANAGEMENT
A. Realizing total inventory management
Total Inventory Management (Total Inventory
Management, TIM) contains the following specific
meanings:
(1)The whole enterprise staff’s participation in inventory
management
Enterprise should establish full inventory management
consciousness. Namely the whole enterprise staff should be
involved in inventory management. The purpose of
advocating Full inventory management consciousness is to
make the enterprise staff know the importance of inventory
control and the relation between their post and the enterprise
inventory.
(2) Inventory management in every process
Inventory process of Manufacturing enterprise may be
divided into order process, purchase process, production and
processing process, storage process and outbound sales
process. Inventory management control should go through
all inventory processes from order to outbound sales.
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(3)The all-round management of the targets
The targets of total inventory management include stock
supplies and material supply, production planning,
production site conditions, customer requirements, and
information about customers’ demand.
B. Enhancing enterprise management decision-making
ability and reducing enterprise inventory
(1)Developing new products with the guide of market
demand
The ability to develop new products has a direct impact
on enterprise's inventory. Only through keeping on
developing new products catering for the market demand and
thus reducing inventory pressure, can enterprises remain
invincible in competition.
(2) Implementing the strategy of famous brand and
creating famous brand products.
Enterprises should be aware that producing and selling
brand products are directly related to business interests and
long-term development. This idea should be put into the
practice of the whole enterprise from top leaders to first line
workers. Famous brand products can help to expand the
market share.
(3) Practicing Mass Customization production,
strengthening Postponed Manufacturing research
Mass customization production is a mode of production
which not only has high efficiency and low cost of mass
production, but also can meet customers’ demand with
individuation and diversification in small quantity and many
batches. The manufacturing enterprise can have all sorts of
general parts and production factors in stock and do not
complete the last link of production and package until it
receives the end users’ requirements for the function,
appearance and quantity of products. This is called
Postponed Manufacturing. The biggest advantage of
Postponed Manufacturing is to reduce the risk of
unmarketable products, and thus helping enterprises reduce
storage.
C. Reinforcing the enterprise internal supply management,
reducing raw material inventory
(1) Establishing scientific raw materials purchase
procedures and standards of scheduled time and quantity
Standards of scheduled time and quantity, also termed as
standards of operation schedule, are standards made through
analyzing and calculating the operation of the processing
targets in production. Purchase standards of scheduled time
and quantity are standards of purchase schedule. They are
standards made through scientific analysis and calculation of
the purchase time and quantity. Scientific and effective
standards of scheduled time and quantity can standardize
enterprise supply and purchase system, reduce the capital for
material purchase and speed up capital turnover.
(2)Setting up and perfecting the vendor audit system to
strengthen supplier management.
Supplier evaluation index system generally involves the
following aspects: quality, cost, ratio of on-shedule delivery,
service, technology, asset management, staff and process,
etc. These aspects may affect the cooperation of the supply
chain.
D. Highlighting marketing management and lowering
finished products inventory
(1) Doing careful market research
Enterprise's success or failure is depends on the study
and grasp of the market. Enterprise should correctly analyze
market trends, major competitors, market size and
enterprise's own market share; do a good job in market
positioning and product positioning and thus make feasible
marketing strategy.
(2) Trying to practice manufacturing-according-to-sale,
strengthening the order management
Market economy requires that production be arranged
according to sale and order. So enterprise must strengthen
order management, in order to improve the reliability of the
order and seriousness.
(3) Maintaining a good relationship with customers
(distributors)
A good relationship with customers (distributors) can
improve the product's market share and reduce inventory
caused by loss of orders or customers’ frequent change
product specifications and models.
(4) Setting up enterprise sales network, providing
accurate market information for the development of new
products
The sales network can not only function as outlet for
products, but more importantly, provides timely feedback on
products from users. Therefore there should be coordination
between the product development department and the sales
department so that the development department can quickly
develop new products according to users’ need. In this way,
the development cycle can be shortened and inventory
caused by developing products not needed by customers be
avoided.
E. Strengthening production management, reducing work-
in-progress inventory
(1) Implementing 5S management, optimizing production
site
5S management refers to Sale, Sparepart, Service, Survey
and Secondhand. Activities containing these five elements
should be involved in dealing with every production factor at
the work site. A lot of enterprise practice showed that
implementation of 5 S management in manufacturing
enterprises can effectively control the operation of the work
site, improve the management level, keep production in good
order, and greatly reduce work-in-progress inventory.
(2) Using the basic industry engineering method,
reorganizing production site.
The reorganization of the production site, the redesigning
and innovation of the logistics system design the
improvement of operation sequence and method, elimination
of invalid operation, and reduction of the labor load, can
smooth bottlenecks working procedure, optimize the
production process, and finally reduce work-in-progress
inventory.
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F. Reinforcing the whole enterprise coordination,
improving inventory management
(1) Evaluating products inventory regularly
In order to avoid product overstock, the enterprise should
establish stock evaluation system, regularly conducting
comprehensive evaluations to stock products. Based on the
evaluation, the enterprise makes decisions on whether to
suspend or expand production, or develop new products.
(2) Making the enterprise more competitive
Competitive products are welcome by consumers. On the
other hand, there will be no stock caused by unmarketable
products.
(3) Coordinating sales plan, production plan and supply
plan to form the enterprise integrated management system
from the viewpoint of the overall situation
Enterprise inventory is related to all the aspects of the
enterprise internal supply chain, such as market forecast,
product development, purchasing, production to sales and
after-sale service. Therefore enterprises need to integrate the
information coming from these aspects, making sure that it is
fast transmitted, processed and reacted to.
G. Strengthening the coordination and cooperation in
supply chain between enterprises
To establish a strategic partnership between enterprises
of supply chain, the following points are necessary.
Setting up partner selection and evaluation system which
suits the characteristics of the supply chain
The strategic partnership should be established with the
main influential members of the supply chain. The choice of
members should be made on the basis of a series of
evaluations of factors which influence the selection of
strategy partners, such as the evaluation of cooperation
partners’ resources allocation requirements, external
evaluation analysis, evaluation of the past performance,
internal detailed evaluation.
Establishing a set of credit evaluation system accepted by
supply chain enterprises
On one hand, each node enterprise should
conscientiously build up high credit in order to win the trust
of the partners. On the other hand, the concept "the good
faith is the best means of competition" should be advocated
in the whole supply chain. In addition, it is necessary to take
some other measures, such as keeping credit record,
proposing tougher punishments for faith breakers. In this
way, the credit evaluation system which matches the
effective cooperation between supply chain enterprises can
be gradually set up.
Building supply chain cooperation monitoring and
control system.
The cooperation monitoring and control system should be
built by core enterprises in the supply chain to follow up the
whole process of cooperation and change, find problems in
time and take effective measures to solve, ensuring smooth
cooperation and change.
Building up an effective performance evaluation system
and incentive mechanism
On the basis of an objective evaluation of the member
enterprises’ contribution to the supply chain as a whole, the
benefits resulted from and costs needed in the optimization
of the supply chain should be reasonably distributed among
enterprises in the supply chain and different departments
inside the enterprises as well.
Only each enterprise in the supply chain benefits from
the chain management, can they maintain the overall
interests of the supply chain. Moreover, those who make
greater contributions to the supply chain ought to be
specially rewarded in order to keep the chain full of vitality.
Forming a set of effective risk sharing mechanism
Right risk sharing mechanism can raise the efficiency of
the supply chain, and thus produce cooperation interests. In
contrast, shifting out risks is liable to make the supply chain
unstable.
IV. CONCLUSION
To improve the present stock situation of the car
enterprises, they should not only strengthen their internal
supply chain management, but also strengthen the
coordination and cooperation between supply chain
enterprises and the whole coordination countermeasures so
as to improve the management level of the inventory. A set
of supply chain enterprise identity of credit evaluation
system and effective performance evaluation system and
incentive mechanism should be established as well as supply
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chain cooperation monitoring and control system in order to
vitalize the whole supply chain.
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