Inventory Management and Risk Pooling Xiaohong Pang Automation Department Shanghai Jiaotong University
Inventory Management and Risk Pooling Xiaohong Pang Automation Department Shanghai Jiaotong University
Why SCM? Reduce cost,increase profit Improve service level,shorten lead-time
Why SCM? Reduce cost, increase profit Improve service level, shorten lead-time
Introduction to Inventory Management The importance of inventory positioning and the need for the coordination of inventory decisions and transportation policies have long been evident. Managing inventory in complex supply chains is typically difficult and may have a significant impact on the customer service level and supply chain system- wide cost
Introduction to Inventory Management The importance of inventory positioning and the need for the coordination of inventory decisions and transportation policies have long been evident. Managing inventory in complex supply chains is typically difficult and may have a significant impact on the customer service level and supply chain systemwide cost
What Is Inventory? Stock of items kept to meet future demand
What Is Inventory? Stock of items kept to meet future demand
What Is Inventory Management? The goal of effective inventory management Have the correct inventory at the right place at the right time Minimize system costs while satisfying customer service requirements Tasks of inventory management How many units to order When to order
What Is Inventory Management ? The goal of effective inventory management Have the correct inventory at the right place at the right time Minimize system costs while satisfying customer service requirements Tasks of inventory management How many units to order When to order
Customers, Field demand Sources: Regional Warehouses: centers plants Warehouses: stocking sinks vendors stocking points ports points Supply Inventory warehousing costs Production/ purchase Transportation Transportation costs costs costs Inventory Where do we hold inventory? warehousing costs
Supply Sources: plants vendors ports Regional Warehouses: stocking points Field Warehouses: stocking points Customers, demand centers sinks Production/ purchase costs Inventory & warehousing costs Transportation costs Inventory & warehousing costs Transportation costs Where do we hold inventory?
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers ■Retailers Types of Inventory WIP(work-in-process):partially completed products Raw materials ■Finished goods Why should we hold inventory?
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers Retailers Types of Inventory WIP(work-in-process): partially completed products Raw materials Finished goods Why should we hold inventory?
Full Truckload Inventory Where do we hold inventory? Types of Inventory Why should we hold inventory? Economies of scale Uncertainty in supply and demand Lead Time,Capacity limitations Did you know full truckload services: Delivered Faster.Afull truckload is usually one to three days faster than a LTL shipment Lower cost.For larger shipments,a full truckload often has a lower cost per pound than LTL Less Damage.With just your shipment on the truck+lack of multiple loading and unloading.a full truckload shipment minimizes possible damage
Inventory Where do we hold inventory? Types of Inventory Why should we hold inventory? Economies of scale Uncertainty in supply and demand Lead Time, Capacity limitations
Think-Pair-Share Take 2 min.to consider examples (p24):Dell,Liz Claiborne,IBM and Cisco,think about the question below,then discuss with your neighbors What are the causes of the problems that these companies were facing?
What are the causes of the problems that these companies were facing? Think – Pair – Share Take 2 min. to consider examples (p24): Dell, Liz Claiborne, IBM and Cisco, think about the question below, then discuss with your neighbors
Goals of SCM Reduce Cost,Improve Service Because of not managing inventory successfully In 1994,"IBM continues to struggle with shortages in their ThinkPad line."(WSJ,Oct 7,1994) In 1993,"Liz Claiborne said its unexpected earning decline is the consequence of higher-than- anticipated excess inventory."(WSJ,July 15,1993) In 1993,"Dell Computers predicts a loss;Stock plunges.Dell acknowledged that the company was sharply off in its forecast of demand,resulting in inventory write downs."(WSJ,August 1993)
Goals of SCM Reduce Cost, Improve Service Because of not managing inventory successfully In 1994, “IBM continues to struggle with shortages in their ThinkPad line.”(WSJ, Oct 7, 1994) In 1993, “Liz Claiborne said its unexpected earning decline is the consequence of higher-thananticipated excess inventory.” (WSJ, July 15, 1993) In 1993, “Dell Computers predicts a loss; Stock plunges. Dell acknowledged that the company was sharply off in its forecast of demand, resulting in inventory write downs.” (WSJ, August 1993)