The Research Of Inventory Management Of The Qingdao JF Group

The basic characteristics of inventory,which is different from other non-current assets, is that theultimate purpose of the inventory is held for sale, whether the inventory is available for direct sales, suchas finished products and commodities or it still subject to further processing to sell, such as raw materials.Inventory plays an positive role to ensure the production and sales uninterrupted. However, overstocking orinsufficient stock will lead the enterprises themselves in financial difficulties, such as bringing losses,causing resource-intensive and capital chain tension.Qingdao JF Group, which is an old business in knitwear and hair products industry, is also faced withthe problem of inventory management. As the main production of the group are knitwear and hair products,the amount of the inventory is very large and its variety is wide. The existence of the large number ofinventory conceals the contradictions in the process of production and operation, such as the seriousbacklog of inventory, rigid mode and the inaccurate inventories value. If such contradictions can notpromptly discover and resolve, the competitiveness of the Group will be greatly weaken. The inventory istoo large and inventory turnover is too long, which will affect the healthy development of the group. So it isimperative to control the inventory and accelerate inventory turnover.Through research, the study reached the following main points:(1)Qingdao JF Group exists lots ofissues in inventory management, such as inventory value affected by the market volatility;blindly purchasecause new backlog,which increase the pressure on stocks; non-normal inventory reserves crowding outnormal inventory reserves; inadequate inventory management system.These issues affect the Group’sproduction and operation, the group needed to improve its inventory management level.(2)there have manyreasons resulted in inventory management problems of Qingdao JF group. The main reasons are: inventoryvalue is affected by the cost measurement; unreasonable enterprise performance evaluation; the impact ofthe procurement chain; inventory management thinking lags behind; internal control in Group is not perfect;low informatization in Group’s inventory management.(3)In the context of the financial crisis, Qingdao JFGroup should take effective measures to improve its inventory management level to deal with the rapidlychanging business environment,the main measures are: improve the accuracy of planned cost; optimizeprocurement chain to avoid market fluctuations; take centralized centralized management in the suppliesdepartments; strengthen internal control of procurement operations; using ABC inventory classificationmanagement model;establish reasonable inventory management performance evaluation; strengthenenterprise inventory management awareness; strengthen internal controls and improve inventory operationsand improve the Group ERP system.