The hottest JMI joint inventory management brings

2022-08-19
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JMI joint inventory management brings more value

with the application of Internet, ERP, e-commerce and other information technologies in enterprises, the competition mode of enterprises has changed fundamentally. In the 21st century, the market competition has evolved from the competition between single enterprises to the competition between supply chains. Enterprises in all links of the supply chain can realize the sharing and mutual penetration of information and resources through information technology, so as to achieve the purpose of complementary advantages, so as to provide products and services to the market more effectively and enhance market competitiveness. For a manufacturing enterprise, how to set and maintain a reasonable inventory level to balance the shortage risk and loss caused by insufficient inventory, as well as the increased storage costs and capital costs caused by excessive inventory, has become a problem that enterprises must solve. Many enterprises have put forward many inventory management technologies and methods in daily operation and management, and in recent years, a more practical and effective inventory management method in enterprises is Joint Managed Inventory (JMI). This article will give a specific introduction and analysis of JMI and related inventory problems

I. major inventory management technologies

in the 1990s, a series of advanced supply chain inventory management technologies appeared abroad, such as AFR (aggregate forecasting and replenishment), VMI (vendor managed inventor, VMI), JMI and CPFR (cooperative planning, forecasting and replenishment), etc

afr is a relatively traditional supply chain inventory management method, which requires customers to lead the management of their distribution centers and inventory. It is the most widely used method in the interaction of business and trading partners. The core data used for prediction mainly comes from the historical sales data. AFR lacks an integrated supply chain plan, which may lead to high inventory or low order satisfaction rate. VMI requires suppliers to participate in the management of customers' inventory. Suppliers own and manage inventory. Downstream enterprises only need to help suppliers make plans, so that downstream enterprises can achieve zero inventory and suppliers' inventory is also greatly reduced. VMI method can avoid some problems of AFR. Although it has many advantages, it lacks system integration and high dependence on suppliers

jmi requires both parties to participate in inventory planning and management. On the basis of sharing inventory information, both the supplier and the demander, taking the consumer as the center, jointly formulate a unified production plan and sales plan, and distribute the plan to each manufacturing unit and sales unit for implementation. JMI can be seen as the further development and deepening of VMI. By sharing inventory information, jointly formulating a unified plan and strengthening mutual information exchange and coordination, it is conducive to improving the operation efficiency of the supply chain and enhancing the cooperative relationship between enterprises. JMI increases the integration of plan execution in each enterprise, and can achieve significant results in consumer service level, inventory risk and cost management. The flow chart of JMI is shown in Figure 1:

Figure 1 JMI flow chart

II. Problems in general inventory management

in general enterprise inventory management, there are generally problems of excessive inventory and the amplification of demand variation in the whole supply chain (i.e. "bullwhip effect")

tensile test of rubber in order to ensure the punctual production of enterprises, many enterprises have the problem of high inventory. The main reason for this phenomenon is:

inaccurate sales forecast is the main reason for the high inventory. Public preferences are volatile, and many factors will cause irregular purchase tendencies, resulting in great uncertainty in the needs of general users and distributors. In addition, the information communication with downstream enterprises is not smooth, which increases the difficulty of sales forecasting

the error of cargo strategy and the ability of timely control are poor. This uncertainty comes from the ordering department itself. It involves whether there is a reasonable ordering strategy and whether the information about the supply and demand of upstream and downstream enterprises is accurate and timely

instability of ordering cycle. This mainly depends on whether their supply channels are single and whether the performance level of suppliers is satisfactory

basic information such as inventory, goods in transit and demand deviated due to ineffective communication with various departments

in the supply chain, every rotatable knurled nut enterprise will place an order with its upstream. Generally, the seller will not place an order with the superior supplier once an order comes, but will place an order with the supplier after a cycle or a certain amount is summarized on the basis of considering inventory and transportation costs; In order to reduce the order frequency, reduce costs and avoid the risk of out of stock, sellers often order more according to the name, address and contact information of the best economic scale producer and/or the client. At the same time, frequent ordering will also increase the workload and cost of suppliers. Suppliers often require sellers to order in a certain quantity or period. At this time, sellers often artificially increase the order quantity in order to get the goods as soon as possible or in full, or in case of need. In this way, the enlargement of the order volume layer by layer can bring confidence to the extruder enterprise, which can lead to the order demand of the final supplier being several times or even dozens of times of the actual demand of the user. This has brought great negative effects to all enterprises in inventory management and production. We call this phenomenon "bullwhip effect". The reasons leading to the amplification of demand variation, namely "bullwhip effect", are relatively complex. The main reasons related to inventory management are: information asymmetry between enterprises, lead time problems and inventory imbalance

information asymmetry among enterprises. Due to the lack of information exchange and sharing, enterprises cannot grasp the real demand of the downstream and the supply capacity of the upstream, so they have to store more goods by themselves. At the same time, the supply chain cannot realize inventory exchange and transfer, and can only hold high inventory, which will lead to and exacerbate the bullwhip effect

lead time. The change of demand increases with the growth of the early delivery period, and the longer the lead time, the larger the order volume caused by the change of demand. Enterprises often want to leave some room for the delivery date because they have countless concerns about the exact time of delivery, so they hold a longer lead time, so the gradual extension of the lead time also causes the bullwhip effect

inventory imbalance. In traditional sales, the supplier usually sends the goods to the seller, and its inventory still belongs to the supplier, which will be settled after the sales are completed, but the goods are controlled and dispatched by the distributor. This leads to the general tendency of sellers to increase the order quantity and control inventory, which intensifies the increase of order demand and leads to the bullwhip effect

III. the advantages that JMI can bring to enterprise inventory management

(1) information advantages. Information is an important resource of enterprises, and the lack of information communication is also the main reason for the problems in the above inventory management. By establishing a strategic partnership between upstream and downstream enterprises, JMI realizes the information sharing of inventory management among enterprises. This not only ensures that the upstream enterprises of the supply chain can obtain the market demand information timely and accurately through the downstream enterprises, but also enables all activities of each enterprise to be carried out around the changes of customer demand

(2) cost advantage. JMI realizes the integration of inventory management from distributors to manufacturers to suppliers, which enables all three parties to purchase on time (that is, purchase the right items at the right time, at the right place, in the right quantity and quality). Just in time purchase can not only reduce inventory, but also speed up inventory turnover, shorten the lead time of ordering and delivery, so as to reduce the purchase cost of enterprises

(3) logistics advantages. In the traditional inventory management, there are disadvantages of doing things in their own way. Upstream and downstream enterprises manage their own inventory respectively, which inevitably leads to the distortion of demand forecasting, and the "bullwhip effect" greatly reduces the operation efficiency of enterprises and increases the cost of enterprises. JMI breaks the traditional situation of inventory management, and embodies the integrated management idea of supply chain. JMI emphasizes that all parties should participate at the same time, jointly formulate inventory plans and jointly share risks, which can effectively eliminate excessive inventory and "bullwhip effect"

(4) advantages of strategic alliance. The implementation of JMI is based on the full trust and cooperation of all parties. If JMI wants to operate smoothly and effectively, it is indispensable for distributors, manufacturers and suppliers. Everyone is on the same boat. Therefore, the effective implementation of JMI not only strengthens the contact and cooperation between enterprises, but also ensures that this unique cooperation mode between enterprises brought about by inventory management will not be easily imitated by competitors and bring competitive advantages to enterprises

To sum up, JMI (Joint Inventory Management) is a new enterprise inventory management mode that integrates many advanced management ideas. JMI can meet the needs of enterprise inventory management under the new situation, and can effectively overcome the problems of high inventory and "bullwhip effect" in inventory management, so as to reduce costs and improve enterprise efficiency. It can be predicted that with the continuous development and expansion of Chinese manufacturing and distribution enterprises, the standardization of market and its management, the in-depth development of supply chain management and e-commerce, JMI technology will be widely used in enterprise inventory management, promote the development of Chinese enterprises, and bring more value to enterprises and customers. (end)

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