#A-Z Practical Tips for Inventory Reduction# By SN Panigrahi Know Your Up-to-Date Inventory Levels Impose Budget Limits in the System Classify Inventory into ABC / FSN / VED / HML Lower Inventory Holding Costs Eliminate Obsolete Inventory

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By
SN Panigrahi

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops on above
Published more than 500 Articles
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

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a. Know Your Up-to-Date Inventory Levels - Collect Current Data of
Inventory Estimate Accurately – Improve Forecast Accracy
b. Reduce Variety & Standardize: Standardize, Rationalize and Simplify
(SRS) Item Specifications with the aim of Reducing Inventory Items -
Rationalize SKUs
c. Introduce Department or Section wise Budget Limits with Past Spent
Details and Future Requirements.
d. Impose Budget Limits in the System to Restrict the Raising of PRs

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e. Deferment / Postponement: Screen the Requirement by checking its
Urgency. Think if the procurement of the item can be postponed,
f. Classify Inventory into ABC / FSN / VED / HML for better Controlling
Inventory.
For example : Adopting ABC Analysis to Prioritize and Focus on a few
items with High Value. Further Classify A - Class Items into Critical &
Non-Critical by taking Inputs from the User Department.
Focus on A – Class & Non-Critical Items First as an Easy Step to
Reduce Inventory.

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g. Eliminate Obsolete Inventory: Track Inventory Movements - Identify
and Do FSN (Fast, Slow & Non-Moving) Analysis.
h. Lower Inventory Holding Costs – Identify Costs & Take appropriate
actions to Reduce Holding Costs
i. Qualify Suppliers / Vendors on their Performance Rating
j. Development of Local Vendors to ensure Lower Cost of Acquisition
and Reduced Lead Times

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k. Lower Lead Times : Reduce Acquisition Lead Times & Supplier Lead-
Time through proper Selection of Vendors. Also Reduce Manufacturing
Lead Times
l. Centralizing Inventory across all the Units
m. Take Advantage of Price / Quantity Breaks - Consolidate Orders to
Minimize Order Processing Cost & Gain Price Advantage of Larger
Volumes, however with Differed Deliveries as per Scheduled
Requirement

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n. Collaborative Approach : Involve Suppliers, Users, Quality Department
and Finance Department for Collective Decision making with Joint
Responsibility.
o. Negotiate with Extend Payment Terms to Reduce Immediate Financial
Burden
p. Use Just-in-Time (JIT) inventory management practices - Pull Based
Demand / Replenish Based on Demand

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q. Improve Supplier's Quality & Time Delivery Performance : Improve
Supply Reliability. Reward Supplier’s Superior Performance for Quality &
On-Time Delivery. It will Reduce Cost of Rejections, Rework, Warranty,
Inspection and Excessive Expediting; Lead Time & Inventory

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r. Supplier Managed Inventory : Use Vendor-Managed Inventory (VMI) and
Vendor Stocking Programs (VSP)
s. Conduct Regular Safety Stock Review - Update Safety Stock Levels in
Consultation with Users on regular intervals.
t. Forecast Demand - Get Downstream Forecasts and Send Forecast
Upstream

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u. Optimize Lot Size of Purchasing Frequency using EOQ Technique &
also Manufacturing Lot Size.
Do ABC analysis - Identify your Made to Stock (MTS), Assemble to Order (ATO) and Made to Order
(MTO) items.
Since A items are your runner and repeaters, they should be MTS items with adequate safety stock.
B items can be treated as ATO by only carrying raw materials in stock and C items should MTO.

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v. Use Technology to your Advantage to Automate Inventory Controls
and Continuously Analysis Inventory
w. Measure Performance - Measure Inventory Turns and Set Aggressive
Goals - Better Measuring System
x. Conduct Inventory Self Audit or Assessment : Do Periodic Audits of
Inventory to Identify Opportunities for Improvement

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y. Inventory Control is a Collective Responsibility of all the Concerned –
User / Owner, Purchaser, Stores / Warehouse Person and also involve
Suppliers & Customers
z. Train all the Concerned Employees well to understand importance of
inventory realistically

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https://www.youtube.com/channel/UCVZ
ScNa_leR8XbYINEwTFwQ/videos
SN Panigrahi

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17. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 17