Research On Strategy Of Inventory Cost Optimization Under Supply Uncertainty In Company M

In modern society,every company has a complicate problem which is inventory management.Bad inventory management may influence company operation and finance indicator,also result in business retreat and low customer satisfaction.The objective of inventory management is providing expected service for customer with right cost.Small companies don’t have large purchasing volume because of small sales orders and capital,inventory optimization is much more important for them.There are two kinds of supply chain uncertainty,one is cooperation uncertainty,and the other is operation uncertainty.Three sources of supply chain uncertainty is supply uncertainty,manufacturer uncertainty and demand uncertainty.After investigation of company M,we found that the main uncertainty in company is supply uncertainty.Inventory cost consists of purchasing costs,ordering costs,inventory holding costs and stock-out costs.The author analyzed all costs of company M,found that ordering costs,holding costs and stock-out costs are too high in company M.After reading many researching articles and inventory management theory,the author analyzed seven inventory cost control strategies,these are ABC classification,shorten lead time,change order method,KANBAN management,VMI,stock consignment and supply chain information sharing.After considering those inventory cost optimization strategies,the author got proper combination of inventory cost optimization strategies,that is: inventory ABC classification,use different order method for different material,create supply chain information sharing mechanism,and imply partial stock consignment.The objective of the strategy combination is to reduce supply uncertainty,reduce ordering costs,reduce inventory and get higher customer satisfaction.After six months’ implementation,inventory cost of company M is lower than before,customer satisfaction is higher.This proves that the strategy combination is effective.Other similar companies can take it as reference.