Optimization plans for Semiconductor Chips Stock Management

During the operation & management of the company, costs must be reduced. Through scientific management, the company's profits are maximized
Optimization plan for the semiconductor chips stock management

Table of Contents

As a Nand storage FAB that provides Solid-State drives(M.2 NVMe, mSATA, DOM), Memory Modules, Memory Cards & USB drives. We also ran into issues with chip inventory management. Please then review our factory’s optimization plan for these issues.

During the formulation of the solution, the following principles must be followed: Cost reduction: During the operation and management of the company, costs must be reduced. Through scientific management, the company’s profits are maximized to the greatest extent possible.

Principle of operation implementation: When developing solutions, it is critical to ensure that the solution is not a “slogan,” and that it is operable and realizable. The solution can be applied to the company’s inventory management scenario, potentially improving the current situation.

Principle of the initiative: The solution should be proactive, which means that before the problem or related situation occurs, the solution can help remind the relevant person in charge in time, allowing them to make corresponding adjustments in time before the problem occurs. Avoid “fixing the problem after it happens” – trying to fix it passively after it happens.

Sustainable development principle: On the one hand, the solution should be effectively applied to the company’s inventory management to ensure that the solution can be effectively implemented; on the other hand, the solution can be iteratively optimized to help the company develop better as the company’s business grows.

Improve the chip inventory data system

Companies can still trackback by hand in the long run, but as the company’s business and customers grow, so will the volume of data, making it difficult to find a solution in a short period of time while maintaining the current way of data management.

The company must establish a complete inventory data system, integrate all data, and create an inventory management data table with complete inventory data so that, in the future, inventory management can be better combined with data analysis and data-driven to achieve more perfect inventory management.

💡Chip data information integration

To ensure that all relevant data are integrated into one database, the company must integrate purchasing, sales, and financial records into the inventory management data system, or there can be a specific primary key between the purchase, sales, and financial records.

For example, warehousing time, warehousing quantity, warehousing product name, and expected warehousing time can all be combined as the product’s ID, or the product’s inventory ID can be established directly to ensure that each product can be traced back to its source. The records of warehousing, warehousing, purchasing and sales, finance, and other records can be completely combined, allowing for the discovery of all records from warehousing to warehousing.

Mutual matching and secondary confirmation between data can be achieved through the integration of purchasing, sales, financial, and other data to avoid the occurrence of repeated PO. If there is a duplicate PO, which is usually due to a quantity adjustment or the addition of new exhibits, relevant information in the inventory table should be combined to distinguish between forecast and actual. The recording of these fields can help the relevant data analysis later on by reflecting customer needs and supplier production status.

It is possible to more objectively reflect the status of inventory management using the inventory table created after data integration. If there is a problem, you can quickly retrieve the corresponding data to investigate. In the case of a small scale, you can solve the problem using VB and Python, and then when the company grows to a certain size, consider purchasing inventory management software.

Because a set of software costs nearly hundreds of thousands of dollars, and management and use of familiar software requires a certain amount of time and labor costs, this also necessitates some good planning, and the relevant data set has been sorted out in advance and can be imported, laying a good foundation for the company’s data management in the future.

On the one hand, it can help to create a more comprehensive inventory database. When there is a relevant demand in the future, the data of relevant customers or products can be retrieved directly for data analysis to check for anomalies. On the other hand, the company’s internal data can be linked horizontally to maximize data value.

💡Establish inventory data management indicators

In addition to basic data indicators in inventory data management, corresponding inventory data indicators based on basic data should be established to aid in better inventory analysis across multiple dimensions. The following are examples of common inventory management data indicators and application scenarios:

We can analyze the quantity and amount of inventory by starting with the quantity and amount of inventory. For example, we can determine the quantity and amount structure of inventory products, which products currently occupy a larger proportion, which products have higher profits, which customers are more important to the company, and which products are the company’s key products. As a result, make the necessary inventory plan adjustments.

Make a comparison of the inventory quantity and amount in the previous period compared to the previous period, and determine the difference in the number and amount of current and previous products. Make inventory trend predictions, calculate inventory age based on days in storage, rank the inventory number of products, and make corresponding adjustments to inventory features.

The storage age of various products in the inventory can be calculated by subtracting the storage time from the date of the day. A period can be set for storage. If the storage age exceeds a certain period, it can be specially marked to screen out products with storage ages that exceed that period.

Customers can request shipment in advance to avoid negative consequences such as poor product quality caused by excessive warehouse storage time. For example, to avoid the additional cost of the product becoming overstocked and sluggish materials, products with an excessively long storage age will occupy the volume of the warehouse, causing management inconvenience and storage costs.

On the other hand, occupying cash flows can have an effect on fund health. Inventory products with excessively long storage ages can also be analyzed to determine the causes of excessive storage time, such as excessive purchases, improper inventory management, or other factors, in order to make inventory management adjustments based on relevant situations.

In conjunction with the analysis of shortage materials and safety inventory, some materials are listed as shortage materials when the actual demand exceeds the quantity provided by suppliers. On the one hand, scientific demand prediction for shortage materials is made, and some products are properly stored in advance to avoid product shortages when customers are in desperate need.

On the other hand, we can communicate with customers ahead of time to understand their production plans, allowing us to understand their actual needs and deliver goods accordingly, forming better cooperation and increasing customer satisfaction. Second, once we understand our customers’ production needs, we can purchase goods in advance based on our own inventory situation, which can improve the inventory transfer rate. Faster return of funds, lower inventory pressure.

Out-of-stock rate: Based on the actual delivery and customer demand quantity, an out-of-stock rate can be calculated and compared to the total quantity.

We can determine the company’s actual out-of-stock situation using the out-of-stock rate. Long-term stock outages may result in customer loss. As a result, when the out-of-stock situation occurs frequently or the phenomenon of out-of-stock rate increases, it indicates that the predicted quantity of products is insufficient and the purchase is insufficient, which cannot fully meet the needs of sales and affects customer satisfaction. Similar situations must be predicted and adjusted for related product categories.

Inventory turnover, inventory turnover days

In general, the inventory turnover rate is the total shipment and average inventory in the time period, which can reflect the overall inventory turnover situation, but also the health of the inventory, through inventory turnover rate and inventory turnover days.

If the inventory turnover rate is high, it means that the inventory products are in good condition, the inventory forecast of the purchase is basically consistent with the actual demand of customers, and the funds are not occupied for a long time. It also means that the company’s cash flow is healthy and good, and it can earn more profits in the future.

If the inventory turnover rate is too low, the product is at risk of becoming a sluggish material. Then, analyze the sluggish material of related products, determine the cause of the sluggish material, and make appropriate adjustments.

Backlog of dull material

Various uncertain factors in inventory management, such as chip upgrading and iteration, customer demand changes, and unreasonable prediction, will bring the risk of sluggish inventory to the inventory. The inventory products can be analyzed to find the reasons for the inventory products to become a backlog of sluggish materials, and then the corresponding solutions can be made to release the inventory and avoid the occupy of funds.

These indicators at the execution level of inventory, in addition to the single indicators of inventory described above, reflect a specific aspect of the product. In addition to inventory indicators, there are comprehensive indicators at the company level that show the overall operating status of a company from the top down. And can better meet user needs while lowering inventory costs as much as possible, which are the two ultimate goals of inventory management.

Gross margin, net margin, net profit, revenue growth, customer satisfaction, and so on. These comprehensive indicators can show a company’s overall revenue, reflecting the company’s growth rate and future development trend. Customer satisfaction can help a company’s reputation, allowing it to gain more customers and enter a virtuous circle.

Words in the end

It can observe the overall picture of the current inventory from top to bottom, and understand the variety, quantity, storage time, and storage age of the current inventory products, allowing for in-depth analysis, based on the vertical combination of multiple inventory data indicators established.

Determine which products have been in the library for a longer period of time, and then analyze them to determine the underlying issues, such as whether there is a deviation in the procurement forecast plan leading to excessive purchase quantity, sudden changes in customer demand, or unreasonable internal inventory placement, and so on. The data can be the basis for a comprehensive inventory management database. Objective discovery of inventory problems in a shorter period of time to aid in problem resolution.

DiskMFR Field Sales Manager - Leo

It’s Leo Zhi. He was born on August 1987. Major in Electronic Engineering & Business English, He is an Enthusiastic professional, a responsible person, and computer hardware & software literate. Proficient in NAND flash products for more than 10 years, critical thinking skills, outstanding leadership, excellent Teamwork, and interpersonal skills.  Understanding customer technical queries and issues, providing initial analysis and solutions. If you have any queries, Please feel free to let me know, Thanks

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