Misunderstanding Three: Picky Eating, Leading to "Hidden Hunger"
Eating should not involve binge eating or overeating, as it can cause indigestion later on, which in turn affects the overall health of the body. However, during the actual inventory management process, there are often instances of binge eating and overeating. The main reasons include the pressure of company responsibilities, procurement personnel's lack of understanding of inventory and sales volume, stockpiling based solely on impulse, and purchasing large quantities of slowly selling products for small profits, which leads to poor turnover.
Moreover, we often think, "If I accumulate too much, the supplier can take it back." In reality, this does have some effect, but it is merely a rescue measure and should be used sparingly. This principle is like when we eat too much and try to "vomit" it out; it certainly feels uncomfortable and is definitely harmful to our health.
To prevent overeating, one must know their own appetite. For inventory management, preventing accumulation primarily involves knowing how much you can sell. Predicting sales volume is the basic requirement. We should carefully analyze and predict historical sales data rather than making judgments based on rough impressions.
Just as indigestion can affect the normal functioning of other organs, once accumulation occurs, a series of problems will arise: First, it increases the company’s capital occupation cost, which could otherwise be placed in a bank to earn interest; second, it increases storage capacity pressure, prompting warehouse managers to complain about insufficient space and request external warehouse rentals; it also increases warehouse management costs, slows down picking speed, and reduces accuracy rates. Additionally, products with expiration dates face the risk of being discarded...
Eating should not only satisfy hunger but also be nutritious, eliminating picky eating. Many people likely understand the harm that picky eating can cause better than I do. For example, excessive intake of animal-based foods and fats, low consumption of grains that are overly refined, and insufficient intake of calcium, iron, vitamin A, C, and other micronutrients can easily lead to obesity, indirectly causing high blood pressure, high cholesterol, diabetes, etc. Inventory management similarly emphasizes "balanced diet and business," which is the issue of reasonable inventory structure. It mainly involves细分 management of incoming goods.
How should one prevent stockouts? I feel that we should still make predictions about sales volume and then follow the "1.5 times rule" for ordering regular products. For holiday promotions in malls, we should closely cooperate with the factory's KA department and prepare promotional products two months in advance. Establish KA reserve inventory, where procurement and mall guides propose relatively reasonable purchasing targets based on historical data and relevant factory conditions.
Misunderstanding Two: Self-Destructive Actions, Entering a "Starvation State"
In daily inventory management processes, whether for dealers or retailers, inventory management is an unavoidable issue. Good inventory management not only accelerates the utilization of funds and improves product turnover rates but also reduces warehouse usage costs. However, in practical work, many managers tend to make various mistakes, falling into different misunderstandings. The most typical ones are the following four major misunderstandings:
Misunderstanding One: Binge Eating, Leading to Inventory Accumulation
In home appliance sales, sometimes such examples occur: the same model of electric razor consistently sells more than 1000 units per month, so you stocked up according to the 1.5 times inventory. But the next month's sales dropped to around 500 units, leaving you puzzled. Upon checking at the terminal, it turns out that this product comes in two colors, and due to CCTV...
Just as we cannot condense three meals into one, we cannot place a very large order all at once expecting it to last forever. Therefore, setting an appropriate ordering frequency is essential. Of course, nothing is absolute; special situations require special handling, such as holiday inventory preparation, bulk purchasing reducing procurement costs, or抢货 (grabbing goods) when suppliers have temporary shortages.
Sometimes after binge eating, people may enter another extreme state, which is "self-destructive actions." Often after active or passive stockpiling, a series of adverse consequences occur, leading procurement personnel to become cautious and skeptical of the manufacturer's persuasion and marketing tactics, becoming hesitant to decide on market demands. Many people naturally assume that reducing accumulation requires reducing orders and inventory levels, which often leads to stockout situations. When the human body remains hungry for a long time, it naturally leads to malnutrition and reduced physical activity. Insufficient supply will lose business opportunities, decrease customer satisfaction, and inevitably lead to a decline in sales performance.
This article is from: Just-In-Time Production