Transcript 1. Stocks and Inventories

Chapter1
Stocks and Inventories
Aims of the chapter
• Introduce the ideas that lie behind
inventory management.
• Define the terms used.
• Describe the general features of
stocks, their purpose, importance and
use.
Stock
1. 貯存;(知識等的)蓄積
2. 進貨,庫存品,存貨
3. (公司的)股票,股份
4. 【英】公債,國債
5. 原料,材料
6. (湯等的)原汁,湯料
7. 信任,相信
8. 家畜
9. 樹幹;插枝的母株
10. 家系,血統[C][U]
11. (工具的)柄,把;槍托
12. 紫羅蘭屬植物
Inventory
1. 存貨清單;存貨盤存(報表);財產目錄[C][U]
2. 清單上開列的貨品;存貨[C][U]
3. 詳細目錄(或記載)[C]
4. 財產目錄(或其他細目)的編製[U]
Stocks of materials
Definition of terms
• Stock consists of all the goods and
materials that are stored by an
organization. It is a store of items that
is kept for future use.
• An inventory is a list of the items held
in stock.
Stocks of materials
• In recent years, it has become more
common to use ‘inventory’ for both
the list of items and the stock itself,
and the two terms then become
interchangeable.
• An item is a distinct product that is
kept in stock: it is one entry in the
inventory.
• A unit is the standard size or quantity
of an item.
• All kind of stocks need the same
kinds of management.
• For simplicity, we will use the general
term ‘material’ for anything that is
kept in stock.
Stock cycle
• Stocks are formed whenever an
organization acquires materials that it
does not use immediately.
• Figure 1.1
Each stock cycle has the following
elements:
• An organization buys a number of units
of an item from a supplier.
• At an arranged time, these units are
delivered.
• Unless they are needed immediately, the
units are put into storage, replenishing
the stock.
• Customers, either internal or external,
create demands for the item.
• Units are removed from stock to meet
these demands.
• At some point, the stock gets low and
it is time for the organization to place
another order.
• Fig. 1.2 stock levels in a typical cycle
• Customer and supplier can be internal
and external.
• The cost of holding stock is about 20
percent of its value a year.
• Organizations put a lot of effort into
controlling these costs through careful
inventory management. This function is
also called stock control or inventory
control.
Reasons for holding stocks
• Giving a buffer (緩衝)
Stocks are expensive, because of the
costs of tied-up capital, warehousing,
protection, deterioration, loss,
insurance, packaging, administration,
and so on.
Why do organization hold stock ?
• Based on the need for a buffer, or
cushion, between supply and demand.
• Angela’s Bakery Shop
• Two consecutive operations on a
assembly line.
• These two examples show how stock
gives a buffer between supply and
demand. It allows for variation and
uncertainty in both supply and demand.
Organizations hold stocks to do:
• Allow for demands that are larger than
expected, or at unexpected times
• Allow for deliveries that are delayed or
too small.
• Allow for mismatches between the best
rate of supply and actual rate of demand
• Decouple adjacent operations.
• Avoid delays in passing products to
customers.
• Take advantage of price discounts on
large orders.
• Allow the purchase of items when the
price is low and expected to rise.
• Allow the purchase of items that are
going out of production or are difficult to
find.
• Make full loads for delivery and reduce
transport costs.
• Give cover for emergencies.
Types of stocks
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•
Raw materials
Work in progress
Finished goods
Spare parts (備用零件)
Consumables(消耗品)
Types of stocks (continued)
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Cycle stock
Safety stock
Seasonal stock
Pipeline stock – is currently being
moved from one location to another.
• Other stock
Importance of stock
• There is a huge variation in the
stockholdings of different industries
and organizations.
Questions
• What is the difference between stock
and inventory?
• How would you define ‘supplier’ and
‘customers’?
• How do stocks act as a buffer
between operations?
• How would you classify lubrication oil
for an engine?
Stocks in the supply chain
• Shape of supply chains
• Each becomes a customer and a supplier.
Stocks in the supply chain
• Example:
(1)Milk moves through a farm, tanker
collection, dairy, bottling plant, distributor and
supermarket before we buy it.
(2)A toothbrush starts its journey with a
company extracting crude oil, and then it
passes through pipelines, refineries,
chemical works, plastics companies,
manufacturers, importers, wholesalers and
retailers before finishing up in your bathroom.
Stocks in the supply chain
• This series of activities and organizations
forms the product’s supply chain.
• The function that has overall responsibility
for moving materials through the supply
chain is logistics or supply chain
management.
• A supply chain consists of the series of
activities and organizations that
materials move through on their journey
from initial suppliers to final customers.
• Logistics or supply chain management
is the function responsible for this flow
of materials.
An empirical observation suggests that
the aggregate amount of stock held in a
number of locations is:
AS(N2) = AS(N1) ×
N2
N1
Where
N2=number of planned future facilities
N1=number of existing facilities
AS(Ni)=aggregate stock with Ni facilities
Worked example
AJT Transport of Manchester is planning
to increase its services to mainland
Europe. It currently has 12 depots(補給
站) with aggregate (聚集) stock valued
at 12 million and plans to expand to 16
depots. With a carrying cost is 20
percent of value a year, what is the
likely cost of this change ?
solution
N1=12, N2=16, AS(N1)=12 million
AS(N2) = AS(N1) ×
N2
N1
=12 × √16/12 = 13.9 million
The additional depots will raise stock
holding costs by: (13.9 – 12) × 0.2 =
0.38 million
• The best shape of a supply chain
depends on many factors, such as
product’s value, bulk(容積),
perishability(易腐敗的), availability, and
so on.
• It also depends on the organization’s
aims and business strategy.
• Broadening the chain and adding more
intermediaries gives higher customer
service, but increases costs and reduces
the organization’s control.
• Making the supply chain long and narrow
can reduce costs, but the organization
loses some control and customer service
does not improve.
Taking the following steps to
achieve best shape of supply chain
• Logistics strategy
• Examine current operations
• Design an outline structure for
logistics
• Make detail plans
• Get final approval
• Finalize(完成) building design
• Finalize equipment design
• Fit out(配備) facilities(設備, 設施)
• Open and receive stock, run final tests of
all systems, finish training and begin
operations.
• Sort out(挑出) teething problems(初期困難)
and get things running smoothly.
• Monitor and control, ensuring that
everything works as planned, measure
performance, revise targets, etc.
These are only guideline to suggest
the decisions in designing a supply
chain.
• If an organization wants fast delivery, it
has warehouses close to final customers;
• if it wants the lowest costs, it
concentrates stocks in very large,
centralized warehouses that are
inevitably(不可避免地) some distance
from customers.
Cooperation within a supply chain
Worked example
A simple supply chain has a
manufacturer, regional and local
wholesalers, a retailer and final
customer. Each organization holds its
own stock of one week’s demand. One
week, demand from final customers
rises to 20 units. Assuming that the
deliveries are very fast, how does this
affect stocks in the supply chain ?
• The total amount of stock in the
supply chain rises from 40 units to
190 units, and this will take 15 weeks
to return to normal.
• The ways to avoid such problems is
to coordinate the stocks and flow of
materials.
This brings a series of benefits:
• Lower costs- with lower stocks, less expediting,
balanced operations, economies of scale, etc.
• Improved performance- with more stable
operations, better planning, higher productivity
of resources, etc.
• Improved material flow – with co-ordination
giving faster and more reliable movements.
• Better customer service- with shorter lead times
and faster deliveries.
• More flexibility- with organizations reacting faster
to changing conditions.
Achieving cooperation in the supply chain
• Developing a valuable working
relationship
• Formal arrangement with a written
contract setting out the obligations of each
party.
• Strategic alliance or partnership: involves
a commitment over an extended time
period, and a mutual sharing of
information and the risks and rewards of
the relationship.
Trends affecting stock
• Improving communications:
Electronic data interchange( EDI)
European Union
North America Free Trade Agreement
Improving customer service
• Improving customer service
• Concentration of ownership(所有權)
• Outsourcing inventory management
Benefits for Outsourcing inventory
management
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Lower fixed costs
Specialist suppliers
Guaranteed high levels of customer service
Flexible capacity
Lower exposure to risk
Increased geographical cover and local
knowledge.
• A convenient way of working in new markets.
• Cross-docking: materials arrive at the
receiving area and are transferred straight
away to the loading area where they are put
onto delivery vehicles for customers.
• Postponement – package-to-order, where a
company keeps a product in stock, but only
puts it in a box written in the appropriate
language when it is about to ship an order.
• Increasing environmental concerns: air
pollution, water pollution, energy
consumption, urban(市區的) development
and waste disposal(處理, 處置).
Changes to aggregate stocks
• Changing views of stock
• Aggregate national stocks
• Effects of the business cycle(商業週期)