| Inventory Turnover (ITO) is normally a Key Performance Indicator (KPI) in a company. Or we can calculate DIO on the other hand to find out how about the inventory level in a company. In S company, Days of Inventory (DIO) measured as "inventory value last day of the month" divided by "forecasted CoS for the month after". If a company has a very bad ITO, it usually means this company need a more cycle to get the cash back, and it is longer to get the Account Receivable (AR) payment back. Means this company will very much possible to only have lower profit.Then it becomes a vicious circle. That’s the reason why we emphasized that ITO is a KPI for a company especially on operation efficiency.Hereby we will analyze about the improvement strategy. By these strategy, we could possible to increase the ITO, based on lots of data analyze and supply chain management theories. If we could improve the ITO, definitely it will help much on the company’s ROI (Return On Investment) and on the cash flow. Also, to improve the ITO, it should not only be responsible by somebody or just a solely department, it should be seriously taken care by the whole management of the demand and supply chain。Therefore, the file is trying to explain the relative strategy to improve the ITO in S company by following chapters. The first chapter is roughly introduced the industry and the background of this topic. The second chapter is generally introduced the relative theories about the inventory management, ITO definition, Vendor Managed Inventory (VMI) mode, ABC Analytic Method, Safety stock etc. In the third chapter, it was mainly to introduce the S company background and purchasing mode. It also included S company’s supply chain process. Then in the fourth chapter we put a lot of effort on detail analyze the problems and the accordingly inventory strategy improvements one by one. Finally in the last chapter the fifth chapter, it makes the conclusions and also points out what need to be focused on in the future. |
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