Information Support System for supplier inventory management

With the rapid development of modern information technology, e-commerce has become an important tool for enterprises to win the future market with its brand-new business philosophy and implementation methods. Information systems have become an indispensable tool for enterprise management. Therefore, the implementation process of supplier inventory management involves not only the process, but also the implementation of the information support system. The use of information support systems has become an inevitable requirement for suppliers to manage inventory.

 

Internet-based supplier Management Inventory System

 

With the development of Internet technology, many enterprises began to try to manage Inventory of suppliers and inventory partners online. Among the few running Internet-based supplier management inventory systems, the most typical is General Electric's global VMI system. Therefore, we can study the running mode of the global VMI System to discuss the running idea of the Internet-based supplier management inventory system.

 

General Electric's global VMI System is an Internet-based supplier management inventory system. It combines information technology with sensing technology and six sigma data analysis to provide customers and suppliers with a cooperative service for managing the supply chain. Through this global VMI system, relevant parties in the supply chain can understand the inventory level in real time, and analyze and predict historical data and total data through the data analysis function provided by the system, to smoothly produce and reduce inventory costs.

 

This system was originally developed to improve the customer service level of GE Plastics. It tries to improve its service level by monitoring the customer inventory level of GE Plastics, at the same time, make your suppliers do better by understanding the inventory of GE Plastics. GE then commercialized the system, especially for the special storage methods of chemical enterprises. Enterprises can optimize their supply chain management by purchasing this system. Each user can manage the supply chain by entering the website of the Global VMI system.

 

The global VMI system consists of two application software packages: One Software Package provides some basic functions, for example, inventory monitoring, setting the upper and lower limits of inventory levels, providing a Web interface for buyers and suppliers to query inventory, in-transit inventory and order data, and another software package provides complex planning and prediction tools.

 

Before using the Global VMI system, Supply Chain analysts of GE will discuss with suppliers and manufacturers who use the system, through research on users' raw material consumption speed, raw material transportation mode, raw material transportation time, and expected inventory level, the Six Sigma method is used to determine the optimal stock level range of stock raw materials and the details of other replenishment plans for the user, demonstrate the feasibility and effectiveness of the replenishment plan, and finally input the determined replenishment plan into the system.

 

After implementing the Global VMI system, each user can log on to the global VMI website through their respective accounts and passwords to immediately learn the inventory level of their respective suppliers/customers, including inventory raw material name, inventory, inventory detection time, etc. Generally, the system reports the inventory level six times a day. Of course, you can choose to check the inventory more frequently based on your actual situation. Frequent monitoring is originally a nightmare for many chemical companies. Originally, these companies generally check the inventory level one or two times a week, and the inspection method is usually to climb to the top of the storage tank to look down or hit the tank wall to determine the inventory through the sound it sends, these methods cannot accurately measure the inventory level and are time-consuming and labor-intensive. The global VMI system uses sensing technology to enable the computer system to obtain inventory data in real time and display the data in a visualized way (Figure 3.9 ). The system has also added the global inventory monitoring function to meet the requirements of some multinational enterprises. It provides an online world map marked with global factory shards. Each factory Shard is displayed in different colors based on its inventory level. Green indicates that the inventory level is normal, and red indicates that the inventory level is too low, blue indicates that the inventory is high, and yellow indicates that orders must be placed immediately. In this way, suppliers can use this map to immediately view the inventory of factories around the world. The system provides a detailed analysis of inventory usage, and provides daily, weekly, and monthly consumption reports. The report covers average usage, maximum daily usage, minimum daily usage, and fluctuation variance of consumption, so that users can adjust the replenishment plan in time. You can also select how to view data. The factory owner may want to know the inventory level of each storage tank in the plant area, while a regional manager may want to know the total inventory level of all the factories in the region under his jurisdiction. The aggregate view in the global VMI system enables users with appropriate permissions to obtain comprehensive data at any level. At the same time, you can also choose to view the total inventory and inventory consumption curves of any time segment.

 

Based on the data query, the system predicts future usage based on the data, and users can choose to download the prediction data into a workbook for more careful analysis. In addition, the system allows users to automatically update and forecast based on the burst time. For example, if the raw material is damaged during transportation, the buyer can immediately provide this information to the system. The system automatically updates the replenishment plan based on the latest situation to compensate for the damaged raw materials by changing the date of transportation of other raw materials, increasing the quantity of transportation of other raw materials, or adding raw materials.

 

The buyer and their suppliers can choose Automatic shipping, that is, when the inventory falls to a pre-determined trigger, the supplier automatically delivers raw materials to the buyer. However, if the buyer wishes, the system can also require the system to notify the buyer before placing the new order, and the supplier will take action after the order is approved.

 

Supplier Management Inventory System Based on enterprise resource plan

 

Currently, many enterprises have implemented enterprise resource planning (ERP) to improve their competitiveness through comprehensive information management. The sales and distribution modules of the ERP system contain the functions of logistics control and logistics planning. If you want to implement a supplier inventory management system, you can modify the ERP system and develop a supplier inventory management system. The basic functions of standardization can be used as much as possible in the system to minimize changes to improve the compatibility between the two systems.

 

The basis for supplier Management Inventory System is the consignment ordering process in ERP. In order to realize supplier inventory management, there are two main problems to be modified during the delegated order process: Payment time and inventory valuation method. In the delegated ordering process of the standard ERP system, the supplier transfers the ownership of the inventory to the buyer until the inventory placed at the buyer's place is consumed, and the buyer pays the supplier. In the supplier management inventory system, the supplier is only responsible for managing the buyer's inventory. However, once the inventory is transferred to the buyer's warehouse, the ownership of the inventory is owned by the buyer, the buyer shall also pay the supplier accordingly. Another change is the inventory valuation method. In the delegated ordering process of the standard ERP system, the delegated inventory is owned by the supplier before it is consumed. Therefore, the supplier must regularly assess the depreciation or value-added status of this part of inventory, in order to reflect the inventory value level of an enterprise more realistically in the financial statement. In the supplier management inventory system, there is no delegated inventory. When the supplier transfers the product to the buyer, the ownership of the product is also transferred. Therefore, this part of inventory should not be re-valued, it should not be reflected in the financial statement. However, this part of inventory data cannot be deleted from the database, because the supplier needs to monitor this part of inventory to determine the replenishment plan of the buyer. The solution to this problem is to create a supplier management inventory database for this part of the inventory data that has been transferred to the buyer. when the product is transferred to the buyer, the data is classified into this database, in addition, the inventory recorded in this database is not valued, so that the correctness of the financial statements will not be affected. Taking the sap r/3 system as an example, table 1 shows the R/3 system and the modifications made to implement the supplier management inventory system.

Table 1: R/3 system adjustments in implementing supplier Management Inventory

	Sap r/3 System	Supplier Management Inventory System
Replenishment of delegated stock	Ownership is not transferred when goods are transferred	Ownership Transfer during cargo transfer
	Buyer prompt payment	Buyer prompt payment
Inventory adjustment	Delegated inventory and other inventory belong to the same database	Delegated inventory and other inventory belong to different databases
	Changes in inventory data are manually input to the System	Changes in inventory data are automatically modified based on the EDI inventory report.

 

Figure 1 shows how the supplier manages the inventory system after the ERP system is adjusted. The incentive for this system operation is that the buyer consumes inventory, and the buyer reports inventory changes to the supplier management inventory system through the EDI inventory report. The system modifies the inventory data recorded in the supplier management inventory database according to the report and stimulates the replenishment order decision. Based on the current inventory level, reordering point, minimum replenishment quantity, and other parameters, the system determines whether to supplement or not. This decision-making process can be performed independently or manually using the decision-making support system. In addition, the supplier management inventory system also takes into account the replenishment delay issue. The system checks the buyer's inventory to see if the buyer has received the previous replenishment. When calculating the next replenishment volume, if you know that the last replenishment delay is reached, you should consider the inventory in transit. After the order is confirmed, it is sent to the buyer through EDI, then the goods are transferred and the payment is prompted through EDI. What the buyer needs to do is to accept the confirmed EDI order or modify the order.

 

 

 

 

Figure 1: How the adjusted supplier manages the inventory system

 

The entire supplier inventory management system can be implemented in three phases. The first stage is the conceptual and definition stage. The supplier and the buyer jointly develop the system process and determine the information required to implement the system based on the data in the buyer's original procurement process. This information includes parameters such as reordering point and minimum replenishment batch, and data such as inventory consumption and replenishment delay. Both parties also need to determine when these parameters are updated, how the data is updated, and how the data is transmitted. The second stage is the pilot facility phase. Suppliers can select products with low replenishment frequency for testing and test whether the system can complete the replenishment process according to the design process. Technically, you can first use a simple method, such as using an email to transmit data and using a workbook to calculate the replenishment volume. The third stage is the full implementation stage. Suppliers and buyers modify the ERP system according to the tested process, and establish a data transmission network to implement a complete inventory management system for suppliers.

 

Conclusion

 

At present, there are some good suppliers on the market to manage Inventory System products. Most of these systems are based on EDI or the Internet. They usually have most of the basic functions required to implement supplier inventory management, so they can meet the needs of most enterprises. Enterprises can also modify the purchased system according to their special requirements, but this secondary development requires additional fees. In addition, you must pay an additional fee for the update and maintenance after purchase. At the same time, it should be noted that different systems have different advantages. Therefore, you must choose based on your own situation.