A collection of resources and also commentary giving an advent to supply chain management and also related systems for students, practitioners, and anyone rather interested in learning an ext about how to design, manufacture, transport, store, deliver, and manage products.

You are watching: Is it possible to achieve zero inventories? why or why not?


This week"s reading includes a the majority of inventory forecast and calculation techniques. To every the companies, list seems choose an evil the everyone wants to kill it.But top top the various other hand, all companies have to keep a specific amount of goods in order to fulfill their customers" needs.According to the article, inventory could accounts for 40 come 60 percent that a company"s asset, i m sorry is nearly the biggest asset top top the balance sheet.<1> In financial accountancy class, i learned the the an ext current legacy the firm has, the more viable the business will be. Thus, minimising the list level come the lowest point should be a preferred outcome because that every company. By act so, the firm can not only alleviate the possession and also facility costs, but additionally gain much more liquidity because that the company to expand the business.When i went with all the inventory calculating formula, ns realised that companies spent a most money on forecasting and calculating. Is there any means to say goodbye to all the inventories? maybe it sounds ridiculous, but is it feasible to no have any type of inventory at all? all these inquiries lead me come the concept of Zero Inventory.
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Zero perform is identified as:"Asystem in i beg your pardon a agency keeps no or very littleinventoryin storage, just ordering precisely what it requirements toselland receiving it in a stylish manner. Zero list is the goal ofjust-in-timeinventory management and also the 2 terms are sometimes used to average the same thing."<2>The concept originally came from Toyota, through its famed Kanban management. This technique helped Toyota link every single point top top the supply chain with each other as a whole, and also reduce the cost significantly. An ext information about Kanban was plainly discussed and also posted by one of our classmate Labale cannes on February 2012. Please visit:Kanban – just in Time Production.Zero inventory has certainly carried a huge success come Toyota. But as I kept reading about this concept, over there are several doubts that pertained to mind:1) It seems only large companies who have leading power in the whole supply chain, like Dell and also Toyota,will have actually the ability to achieve this goal. For several of these companies, they invited their merchant to develop up brand-new factories close to their tree so the the distribution time and also cost can be mostly reduced.

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<3>But small companies might hardly have actually the ability to do so.2) The concept only refer to a zero inventory at a details point in the entire supply chain. A zero list in the middle will put an ext pressure ~ above its upstream and also downstream partners. That is come say, the benefit is actually based upon the higher risk the its suppliers. In quick term, the cost of service providers will increase; in long term, this cost will actually beabsorbed by the customer(as we know that all the expense incurred in the it is provided chain will certainly eventually add to the last price as paid by the customer).<4>3) For part companies,instead of save on computer the items in its own plants, they choose toauthorise an certified dealer to take treatment of the products in order to attain zero inventory. However, in this way, the list is not got rid of - it"s just transferred to another agent"s plant.Above are some of my thoughts around zero inventory. I still have several concerns that ns would choose to discuss with all of you: deserve to we make any type of adjustment on this model to make it additionally applicable for little companies? How can we identify if a company is suitable to apply just-in-time inventory monitoring or not?<1> controlling Inventories: What Is the proper Order Quantity?<2> http://financial-dictionary.thefreedictionary.com/Zero+Inventory<3>http://www.cnbm.net.cn/article/ar220213183_1.html<4> http://blog.sina.com.cn/s/blog_4a74d9980101dvez.html