Development of Inventory Management Policy for Distributor Company LLC "TH Megapolis"
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CHAPTER 1 CHARACTERISTICS OF MEGAPOLIS TRADING HOUSE LLC AND THE EXISTING INVENTORY MANAGEMENT SYSTEM 7
1.1 Organizational and economic characteristics of TH Megapolis LLC 7
1.2 Analysis of the current inventory management policy at TH Megapolis LLC 11
1.3 Features of inventory management at TH Megapolis LLC 23
CHAPTER 2 THEORETICAL FOUNDATIONS OF INVENTORY MANAGEMENT IN
INTERNATIONAL PRACTICE 29
2.1 Methods of inventory management 29
2.2 Analysis of international practices in the field of inventory management 36
2.3 Assessment of the possibility of introducing an alternative inventory management method 43
2.4 Formulation of objective requirements for the inventory management system 45
CHAPTER 3 IMPROVEMENT OF THE INVENTORY MANAGEMENT SYSTEM AT TH MEGAPOLIS LLC 50
3.1 Development of an alternative method for inventory management 50
3.2 Recommendations for the implementation of an alternative inventory management method
at TH Megapolis LLC 55
3.3 Assessment of the economic efficiency of the alternative method of inventory
management in LLC TH Megapolis 58
CONCLUSION 73
REFERENCES 77
APPENDIX 87
1.1 Organizational and economic characteristics of TH Megapolis LLC 7
1.2 Analysis of the current inventory management policy at TH Megapolis LLC 11
1.3 Features of inventory management at TH Megapolis LLC 23
CHAPTER 2 THEORETICAL FOUNDATIONS OF INVENTORY MANAGEMENT IN
INTERNATIONAL PRACTICE 29
2.1 Methods of inventory management 29
2.2 Analysis of international practices in the field of inventory management 36
2.3 Assessment of the possibility of introducing an alternative inventory management method 43
2.4 Formulation of objective requirements for the inventory management system 45
CHAPTER 3 IMPROVEMENT OF THE INVENTORY MANAGEMENT SYSTEM AT TH MEGAPOLIS LLC 50
3.1 Development of an alternative method for inventory management 50
3.2 Recommendations for the implementation of an alternative inventory management method
at TH Megapolis LLC 55
3.3 Assessment of the economic efficiency of the alternative method of inventory
management in LLC TH Megapolis 58
CONCLUSION 73
REFERENCES 77
APPENDIX 87
Globalization has a major impact on inventory management. On the one hand, it provides companies with access to international markets and the opportunity to expand their business. On the other hand, it increases competition and requires companies to be more efficient, including effective inventory management.
The economic sanctions imposed on Russia by Western countries create additional difficulties for doing business, including managing inventory. Effective inventory management can help companies navigate these challenges, streamline operations, and improve competitiveness.
From a practical point of view, the development of an inventory management policy, that takes into account good practices, will allow the enterprise to optimize its operations and improve competitiveness.
The purpose of the study is to develop recommendations for improving the inventory management of TH Megapolis LLC.
To achieve this goal, the following objectives have been formulated, which can be solved in this work:
• to analyze the current inventory management policy in TH Megapolis LLC.
• on the basis of the analysis, identify the advantages and disadvantages of the existing inventory management system, formulate objective requirements for the inventory management system.
• to study modern methods of inventory management, to select appropriate methods for TH Megapolis LLC
• to identify practices of inventory management.
• to propose measures to improve inventory management in TH Megapolis LLC.
Object of research: TH Megapolis LLC.
The subject of the research is the inventory management policy of TH Megapolis LLC.
Management problem: TH Megapolis LLC is a large wholesale and retail trade enterprise that faces the problem of effective inventory management in the context of instability within the international market. The company actively cooperates with foreign suppliers from the CIS countries, Turkey, China, India and Southeast Asia. It is necessary to develop a method for inventory management that will take into account the specifics of international business.
The following methods are used in the work:
1. Document analysis: the method involves the study and analysis of documents of TH Megapolis LLC, which contain information about the current inventory management policy. With the help of this method, it will be established exactly how inventory management is currently carried out in the company, as well as problem aspects and areas for improvement will be identified. This method is used to accomplish the second task of the work plan.
2. Comparative analysis will be applied in the course of comparing international practices of inventory management, as well as in the course of researching their similarities or differences. In particular, the use of comparative analysis will make it possible to determine what methods and approaches are used in other countries and companies, and how they can be applied in the context of TH Megapolis LLC. This method will be used to accomplish the third task of the work plan.
3. Method of data structuring and analysis - includes the collection, organization and analysis of data obtained in the course of research, statistical analysis of data, use of data processing software, etc.
These methods will help to achieve the goal of the study and to fulfill all the tasks specified in the work plan. They will also help to gather the necessary data and information that will be used in the work.
In addition to the already mentioned methods, the following general scientific methods are used in the work:
1. A systematic approach implies the consideration of the object of research as a system consisting of many interrelated elements. In the context of this study, the systematic approach allows us to consider the process of inventory management in TH Megapolis LLC in the context of a broader system - international business, and also makes it possible to take into account all important factors affecting inventory management and develop a more effective method.
2. Analytical methods (analysis and synthesis). Analysis is the process of dividing the whole into its component parts in order to better understand its structure. Synthesis is the process of combining individual elements into a whole to understand the system as a whole. In the context of this work, the analysis is used to study certain aspects of inventory management in TH Megapolis LLC, and the synthesis is used to combine the obtained data and conclusions into a single method for inventory management.
3. Deductive and inductive methods. The deductive method starts with general principles and consists of drawing specific conclusions, while the inductive method begins with specific observations and consists of forming general conclusions. In this study, these methods will be used together: the deductive method will be used to apply the general principles of inventory management to a specific situation in TH Megapolis LLC, and the inductive method will be used to form general conclusions based on the analysis of specific data.
...
The economic sanctions imposed on Russia by Western countries create additional difficulties for doing business, including managing inventory. Effective inventory management can help companies navigate these challenges, streamline operations, and improve competitiveness.
From a practical point of view, the development of an inventory management policy, that takes into account good practices, will allow the enterprise to optimize its operations and improve competitiveness.
The purpose of the study is to develop recommendations for improving the inventory management of TH Megapolis LLC.
To achieve this goal, the following objectives have been formulated, which can be solved in this work:
• to analyze the current inventory management policy in TH Megapolis LLC.
• on the basis of the analysis, identify the advantages and disadvantages of the existing inventory management system, formulate objective requirements for the inventory management system.
• to study modern methods of inventory management, to select appropriate methods for TH Megapolis LLC
• to identify practices of inventory management.
• to propose measures to improve inventory management in TH Megapolis LLC.
Object of research: TH Megapolis LLC.
The subject of the research is the inventory management policy of TH Megapolis LLC.
Management problem: TH Megapolis LLC is a large wholesale and retail trade enterprise that faces the problem of effective inventory management in the context of instability within the international market. The company actively cooperates with foreign suppliers from the CIS countries, Turkey, China, India and Southeast Asia. It is necessary to develop a method for inventory management that will take into account the specifics of international business.
The following methods are used in the work:
1. Document analysis: the method involves the study and analysis of documents of TH Megapolis LLC, which contain information about the current inventory management policy. With the help of this method, it will be established exactly how inventory management is currently carried out in the company, as well as problem aspects and areas for improvement will be identified. This method is used to accomplish the second task of the work plan.
2. Comparative analysis will be applied in the course of comparing international practices of inventory management, as well as in the course of researching their similarities or differences. In particular, the use of comparative analysis will make it possible to determine what methods and approaches are used in other countries and companies, and how they can be applied in the context of TH Megapolis LLC. This method will be used to accomplish the third task of the work plan.
3. Method of data structuring and analysis - includes the collection, organization and analysis of data obtained in the course of research, statistical analysis of data, use of data processing software, etc.
These methods will help to achieve the goal of the study and to fulfill all the tasks specified in the work plan. They will also help to gather the necessary data and information that will be used in the work.
In addition to the already mentioned methods, the following general scientific methods are used in the work:
1. A systematic approach implies the consideration of the object of research as a system consisting of many interrelated elements. In the context of this study, the systematic approach allows us to consider the process of inventory management in TH Megapolis LLC in the context of a broader system - international business, and also makes it possible to take into account all important factors affecting inventory management and develop a more effective method.
2. Analytical methods (analysis and synthesis). Analysis is the process of dividing the whole into its component parts in order to better understand its structure. Synthesis is the process of combining individual elements into a whole to understand the system as a whole. In the context of this work, the analysis is used to study certain aspects of inventory management in TH Megapolis LLC, and the synthesis is used to combine the obtained data and conclusions into a single method for inventory management.
3. Deductive and inductive methods. The deductive method starts with general principles and consists of drawing specific conclusions, while the inductive method begins with specific observations and consists of forming general conclusions. In this study, these methods will be used together: the deductive method will be used to apply the general principles of inventory management to a specific situation in TH Megapolis LLC, and the inductive method will be used to form general conclusions based on the analysis of specific data.
...
On the basis of the study and in accordance with the goal and objectives of the study, the following conclusions and proposals can be made based on the results of the work.
The first chapter provides a detailed description of the company TH Megapolis LLC, including its structure, main economic indicators and features of the organization of work.
TH Megapolis LLC is a large wholesale and retail trade enterprise. The main forms of organization of the trading process include retail sales, online trade, distribution and catalog trading.
The formation of inventory stock in warehouses is driven by several factors. Firstly, possible changes in sales plans and fluctuations in demand require flexibility in inventory management. Secondly, the risks of supply delays from manufacturers and the detection of defective goods also impact inventory levels, necessitating the creation of reserves to minimize negative consequences.
The company has formed its own inventory management policy.
The inventory management system in TH Megapolis LLC is based on the use of 1C Trade Management 8 software, which operates on the basis of Wilson's formula. This system includes several key aspects aimed at organizing the trading process, ensuring the smooth functioning of the enterprise and meeting the needs of customers.
Assortment planning is based on the analysis of current demand, stock balances and the market situation, which allows the company to quickly respond to changes and maintain an optimal level of inventory.
The existing inventory management system has a number of drawbacks:
• limited forecasting methods;
• lack of dynamic optimization;
• insufficient automation;
• The inventory management system does not take into account the variety of goods.
As a result of these shortcomings, the company may face problems such as overloading racks, problems with expired expiration dates, or low-quality goods.
The second chapter reviews scientific research and publications related to stockpile management in order to determine the current state of knowledge in the field and to identify gaps that may be filled by the study.
International inventory management standards and practices are analyzed to understand what approaches and techniques are used internationally, and how they can be applied in the context of the organization under study.
Inventory management practices in Walmart, Amazon, Alibaba Group, JD.com, Zara, Procter & Gamble are considered
Based on a theory and analysis of international practices, requirements for an inventory management system are formulated. These requirements define what an inventory management system must do to be effective and meet the needs of the organization:
• prevention of the formation of excess stocks;
• ensuring the optimal level of inventory;
• use of order management models;
• the use of innovative technologies, algorithms and automation systems.
The third chapter proposes directions for improving inventory management, taking into account international standards and practices for TH Megapolis LLC.
An alternative method of inventory management based on the theory of queuing is proposed, which will improve the processes of planning and distribution of goods. The logic of the proposed method is as follows.
• Each shelf on the rack is a service channel. Most often, there is one product (or very similar commodity items) on the shelf. That is, the company will have the opportunity to manage service channels (for example, allocate another shelf for a hot product);
• Each channel can serve only one requirement at a time. When all channels are busy with service, new requests entering the system become queued;
• The flow of requirements for each service channel is the flow of requests to the inventory management system for a specific product;
• a request (request) is each individual request for the performance of some work or satisfaction of a need;
The application of the queuing theory to inventory management allows you to consider each item as a separate service channel, which greatly simplifies and structures the management process. Thus, we have an inventory management system that works as a queuing system and very, very many service channels, which involves the management of "Big Data".
Within the framework of the proposed method, the inventory management system is considered as serving the main activity of the company, including wholesale and retail trade.
This seems to be the best solution, since the queuing system produces an order of magnitude more control parameters than other inventory management systems: ticket flow, probability of failure, probability of service, number of busy channels, number of busy channels, service time, waiting in queue, idle time, throughput, service efficiency, service level, probability of blocking, probability of overflow, average number of requests in the system, etc.
...
The first chapter provides a detailed description of the company TH Megapolis LLC, including its structure, main economic indicators and features of the organization of work.
TH Megapolis LLC is a large wholesale and retail trade enterprise. The main forms of organization of the trading process include retail sales, online trade, distribution and catalog trading.
The formation of inventory stock in warehouses is driven by several factors. Firstly, possible changes in sales plans and fluctuations in demand require flexibility in inventory management. Secondly, the risks of supply delays from manufacturers and the detection of defective goods also impact inventory levels, necessitating the creation of reserves to minimize negative consequences.
The company has formed its own inventory management policy.
The inventory management system in TH Megapolis LLC is based on the use of 1C Trade Management 8 software, which operates on the basis of Wilson's formula. This system includes several key aspects aimed at organizing the trading process, ensuring the smooth functioning of the enterprise and meeting the needs of customers.
Assortment planning is based on the analysis of current demand, stock balances and the market situation, which allows the company to quickly respond to changes and maintain an optimal level of inventory.
The existing inventory management system has a number of drawbacks:
• limited forecasting methods;
• lack of dynamic optimization;
• insufficient automation;
• The inventory management system does not take into account the variety of goods.
As a result of these shortcomings, the company may face problems such as overloading racks, problems with expired expiration dates, or low-quality goods.
The second chapter reviews scientific research and publications related to stockpile management in order to determine the current state of knowledge in the field and to identify gaps that may be filled by the study.
International inventory management standards and practices are analyzed to understand what approaches and techniques are used internationally, and how they can be applied in the context of the organization under study.
Inventory management practices in Walmart, Amazon, Alibaba Group, JD.com, Zara, Procter & Gamble are considered
Based on a theory and analysis of international practices, requirements for an inventory management system are formulated. These requirements define what an inventory management system must do to be effective and meet the needs of the organization:
• prevention of the formation of excess stocks;
• ensuring the optimal level of inventory;
• use of order management models;
• the use of innovative technologies, algorithms and automation systems.
The third chapter proposes directions for improving inventory management, taking into account international standards and practices for TH Megapolis LLC.
An alternative method of inventory management based on the theory of queuing is proposed, which will improve the processes of planning and distribution of goods. The logic of the proposed method is as follows.
• Each shelf on the rack is a service channel. Most often, there is one product (or very similar commodity items) on the shelf. That is, the company will have the opportunity to manage service channels (for example, allocate another shelf for a hot product);
• Each channel can serve only one requirement at a time. When all channels are busy with service, new requests entering the system become queued;
• The flow of requirements for each service channel is the flow of requests to the inventory management system for a specific product;
• a request (request) is each individual request for the performance of some work or satisfaction of a need;
The application of the queuing theory to inventory management allows you to consider each item as a separate service channel, which greatly simplifies and structures the management process. Thus, we have an inventory management system that works as a queuing system and very, very many service channels, which involves the management of "Big Data".
Within the framework of the proposed method, the inventory management system is considered as serving the main activity of the company, including wholesale and retail trade.
This seems to be the best solution, since the queuing system produces an order of magnitude more control parameters than other inventory management systems: ticket flow, probability of failure, probability of service, number of busy channels, number of busy channels, service time, waiting in queue, idle time, throughput, service efficiency, service level, probability of blocking, probability of overflow, average number of requests in the system, etc.
...
