Research On M Company’s Inventory Management Strategy Of Procurement

Inventory management has always been an important portion of businessoperation. Especially in this tough competitive market situation, it is impossible toachieve the inventory management goals just rely on the effort of warehousedepartment or the enterprise itself. It is widely recognized that the inventorymanagement strategy of procurement in the context of supply chain management is acrucial importance of operating cost reduction.This thesis introduces the research and application status of inventorymanagement strategy of procurement in China and aboard. It defines inventorymanagement strategy of procurement and specifies it’s basis, starting from theintroduction of the definition of procurement and inventory management. It analysesthe operation method/characteristics and application areas of several commoninventory management modes, such as traditional inventory management mode/justin time inventory management/vender managed inventory and joint managedinventory. It indicates that a proper inventory management strategy of procurementshould be formulated base on the characteristics of the enterprise and it’s position inthe supply chain, and accompanied by a suitable inventory management mode.This thesis takes M company as an example, analyzes how a company shouldformulate/adjust its inventory management strategy of procurement base on itscharacteristics and the competitive situation it faces, and how to select a appropriateinventory management mode to support the execution of this strategy. It describes indetails about the market situation which M company in, and introduces the internaloperation environment in the aspects of information system and the relationship withsuppliers. On top of it, this paper focuses on the analysis of the evolution of Mcompany’s inventory management strategy of procurement and its causes. It describesthe formulating and execution status of the current inventory management strategy ofprocurement, and introduces the system structure/procedure/supplier supporting ofthe current JIT plus VMI/SOI inventory management mode, from which it pointsout the inadequacies of such inventory management strategy, followed by improveproposal. What is emphasized in this thesis is that enterprises should formulate itsinventory management strategy of procurement in a supply chain background, andsynchronize its inventory management goal with the entire supply chain’s. In addition,this paper researches inventory management modes, especially on JIT and VMI, inorder to stress that the execution of the inventory management strategy needs to relyon the proper inventory management modes.What have been achieved in the study can provide a reference of the formulationof inventory management strategy of procurement for the enterprises, especially forthe electronic manufacturing enterprises.