- Inventory is held for various reasons like covering process time, allowing for decoupling of processes, and buffering against uncertainties in demand, supply, delivery, and manufacturing.
- There are strategic, tactical, and operational decisions around inventory including what to carry, where to hold it, and how much.
- An effective inventory strategy consists of analytics, transparency into current and desired states, and accountability through metrics and reviews.
- Inventory should be classified and optimized based on part behavior and importance, balancing costs and service levels.
Helping CFOs, COOs, and Supply Chain Heads of diverse blue-chip manufacturing organizations improve working capital, budgeting, planning, and risk management through inventory optimization analytics
Helping CFOs, COOs, and Supply Chain Heads of diverse blue-chip manufacturing organizations improve working capital, budgeting, planning, and risk management through inventory optimization analytics
material management ppt describe the what is material management, aim of material management, objective of material management and function of material management
- Learn a step-by-step description of an ideal approach to benchmarking.
- Why qualitative and quantitative benchmarking go hand-in-hand.
- Steps to setting up a benchmarking program
Presented by: Michael Mikitka, CEO, Warehousing Education & Research Council (WERC)
November 28, 2012 - Consumer Goods Supply Chain Officer Summit 2012 - Shanghai Pudong, China
Planning is an ongoing process that happens at different levels and different times dependent on resource availability and this is recognised by the 5 levels of Supply Chain Planning Horizon.
To achieve operational excellence, a business needs strong collaboration and streamline procedures to follow. It also needs proper management of finances and supply chain altogether. And, the key to achieve this is, BatchMaster manufacturing integrated with Microsoft Dynamics GP. Want to know how? Check out the presentation below
Inventory Management System and Performance of Food and Beverages Companies i...IOSR Journals
Inventory management decisions are an integral aspect of organisations. Inventory postponement as
argued by Bucklin (1965) is where a firm deliberately delays the purchase and the physical possession of
inventory items until demand or usage requirements are known with certainty. This is an effective supply chain
strategy adopted by most manufacturing organisations by reducing the inventory, and in turn reducing the cost
of obsolete stock. This study explores the relationship between inventory management and control and
performance and Food and Beverages companies in Nigeria. Secondary data were obtained from annual
financial reports and accounts of Food and Beverages companies listed on the Nigerian Stock Exchange. The
data obtained were analyzed using simple and multiple regression models. The results show that there
significant relationship between inventory management and control and the performance of Food and
Beverages companies in Nigeria. The multiple regression correlation coefficient (R) =0.996, R2=0.990 and pvalue
=0;00<0.05 The results also show the relative importance of the inventory management decisions made
by the organisation, and the implications these decisions have on the consumer. The findings show that the three
key qualities that are essential in inventory management decisions for manufacturing organisation from the
perspective of the third party logistics provider are customer satisfaction, on time delivery and order fulfillment
material management ppt describe the what is material management, aim of material management, objective of material management and function of material management
- Learn a step-by-step description of an ideal approach to benchmarking.
- Why qualitative and quantitative benchmarking go hand-in-hand.
- Steps to setting up a benchmarking program
Presented by: Michael Mikitka, CEO, Warehousing Education & Research Council (WERC)
November 28, 2012 - Consumer Goods Supply Chain Officer Summit 2012 - Shanghai Pudong, China
Planning is an ongoing process that happens at different levels and different times dependent on resource availability and this is recognised by the 5 levels of Supply Chain Planning Horizon.
To achieve operational excellence, a business needs strong collaboration and streamline procedures to follow. It also needs proper management of finances and supply chain altogether. And, the key to achieve this is, BatchMaster manufacturing integrated with Microsoft Dynamics GP. Want to know how? Check out the presentation below
Inventory Management System and Performance of Food and Beverages Companies i...IOSR Journals
Inventory management decisions are an integral aspect of organisations. Inventory postponement as
argued by Bucklin (1965) is where a firm deliberately delays the purchase and the physical possession of
inventory items until demand or usage requirements are known with certainty. This is an effective supply chain
strategy adopted by most manufacturing organisations by reducing the inventory, and in turn reducing the cost
of obsolete stock. This study explores the relationship between inventory management and control and
performance and Food and Beverages companies in Nigeria. Secondary data were obtained from annual
financial reports and accounts of Food and Beverages companies listed on the Nigerian Stock Exchange. The
data obtained were analyzed using simple and multiple regression models. The results show that there
significant relationship between inventory management and control and the performance of Food and
Beverages companies in Nigeria. The multiple regression correlation coefficient (R) =0.996, R2=0.990 and pvalue
=0;00<0.05 The results also show the relative importance of the inventory management decisions made
by the organisation, and the implications these decisions have on the consumer. The findings show that the three
key qualities that are essential in inventory management decisions for manufacturing organisation from the
perspective of the third party logistics provider are customer satisfaction, on time delivery and order fulfillment
Supply Chain Metrics That Matter: The Cash-to-Cash Cycle 30 NOV 2012Lora Cecere
When it comes to supply chain, no two industries are the same; but, improving Cash-to-Cash cycle (C2C) metrics matters across all industries. With over a decade of investment in technology and process improvements, we can now assess progress. In this report, we examine the financial data in three time frames:
2000-2003 Dawn of Business-to-Business (B2B) commerce and Global Connectivity
2004-2007 Pre-recession
2008-2011 Post-recession
The health of the supply chain can be quickly assessed through the analysis of the C2C metric. It is a composite metric that combines decisions on receivables, payables and inventory management. Overall, while supply chain leaders have focused on the reduction of C2C cycles, little progress has been made. For most, despite a decade of investments in channel connectivity and supply chain optimization, there is limited progress on receivables and inventory. Instead, we find that the most mature companies have turned to increasing Days of Payables in an effort to reduce C2C. This can be detrimental to the overall health of the supply chain.
Over the last fifteen years, the only industry that has shown dramatic and continuous improvement in reducing C2C cycles is high-tech and electronics. While there are slight improvements in consumer packaged goods (CPG) and chemical supply chains, the results in pharmaceutical and automotive are much worse. While many supply chain professionals may claim that the changes in the supply chain—offshoring of manufacturing, cost of capital, increasing product complexity and decreasing product life cycle—are reasons that there was not more progress, the interesting fact is that the industry that had the greatest obstacles made the most progress. The reason? We believe it mattered more in the high-tech industry. With short life cycles and declining margins over the course of the product life cycle, it is just too expensive for a high-tech company to neglect inventory management. As a result, the high-tech and electronics industry has developed better and more comprehensive planning processes overall.
In this report, we share insights on the trends in five industries: automotive, high-tech and electronics, chemical, CPG and pharmaceutical. The data supports three facts:
Inventory is an important aspect in Distribution Management. Inventory Control & Management highlight important issues of inventory and coverage profile. ABC and VED classification are explained. JIT and KANBAN, Japanese techniques used for inventory management are some of the concepts that are discussed in the presentation.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/DistMang
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Joel Marusiak, Neovia Logistics presenatation at Spare Parts 2013Copperberg
"Global Inventory Management Strategy, Design & Execution:
Optimisation & Flexibility Amidst Constant Change" Joel Marusiak, IM Solutions Manager - EMEA, Neovia Logistics presenation at Spare Parts Business Platform 2014.
Find out more http://www.sparepartseurope.com/
1. For Internal Use Only – Do Not Distribute
Improving Inventory Performance
22 March 2016 - Governors State University/APICS
Sunil Kulkarni – Senior Associate NorthFind Partners
3. Why hold inventory?
• Cover process time
• Allow for uncoupling of processes
• Anticipation/Speculation
• Minimize control costs
• Buffer against uncertainties
-Demand
-Supply
-Delivery
-Manufacturing/Processing
4. • Supply Chain decisions Strategic
- What are potential alternatives to Inventory
- How should the product be designed?
• Deployment decisions Tactical
- What parts/items should be carried as inventory?
- In what form should it be maintained?
- How much of each should be held and where?
• Replenishment decisions Operational
- How often should the inventory status be determined?
- When should a replenishment decision be made?
- How large should the replenishment be?
Three levels of Inventory decisions
5. • Part of a well thought out holistic strategy
• Based on the VoC, economic conditions, market intelligence, and supply
chain complexity
• Consists of solid analytics, robust process, and a culture of
accountability.
• A closed loop execution management operating system
• Balances the investments in inventory with requirements of each part
and customer.
• Best in Class companies outperform others by collaborating on an
inventory plan both internally and externally with their key trading
partners.
An effective inventory strategy is critical for
success
6. Understand part
behavior
► All parts are not created equally
► Parts that have predictable demand patterns versus those with
low level of forecastability require different methods of planning.
Understand
types of
Inventory
► Understand by part and location what form of inventory is
required at each node.
► Understanding the relative importance of the parts.
Ensure
execution
► Develop a link between the inventory plan and execution.
► Balance customer service level with inventory carrying costs.
► Ensure the systems, process and culture support execution and
accountability.
Steps to establishing an inventory strategy
7. • Process and tools for governing the progress and ensuring rapid root
cause analysis.
• Creating transparency to current state and desired future state
• is the first step followed by ongoing ‘drum beat’ for
• Rigorous review of status and root cause analysis for areas where
targets are not being met by the organization
- Sales and Operations Planning (S&OP) process framework.
• Clear roles and ownership
• Quick response to disruptions.
• Platforms that enable analytics and optimization of inventory.
Elements of a management operating
system
8. Financial Categories
-Raw Material
-Work In Process (WIP)
-Semi-Finished goods, Components
All look at added value – they change in accounting categories
Do not look at opportunity costs – or help manage inventories
Functional Categories
-Cycle Stock
-Safety Stock
-Pipeline Stock
Differ in the way they are used.
Classification of Inventory
9. 40% 50% 60% 70% 80% 90% 100%
SAFETYSTOCK$
SERVICE LEVEL
Safety Stock $ vs. Service Level
P3
P2
P1
Inefficient position: Safety stock inventory levels
are too high and service levels are too low.
Optimal position:
Safety stock and service
levels are optimized
along this curve.
Extremely high service level, but
requires too much inventory.
Balancing safety stock vs. service level
10. • View planned cycle stock, safety stock, average inventory,
turns/year and service level by part class
Example – Analytics driven optimization
North-Find Inventory Calculator
11. • Compare “what-if” simulations to determine your desired
inventory investment and service levels
• Change “A2” and “A3” service levels to 98%
• Notice change in average inventory required
Example..
North-Find Inventory Calculator
12. BIC Profile
BIC companies exceed 95% accuracy on inbound and outbound
orders while reducing total landed cost and out of stock frequency
83% are more likely to segment the demand forecast based on key
product-customer characteristics.
67% are more likely to provide accurate views of inventory and
ensure that “availability to promise” is extended across multi-
echelon inventory whether at stores, DCs, suppliers or partners
Aberdeen Research 2014
13. Metrics that drive accountability
High performing companies measure Inventory at business and functional levels
Current FGI benchmarks indicate 67% or more of companies measure the following:
Inventory Balance
Inventory as measured in dollars, units or lbs.
Inventory Turns
The comparison of dollars of inventory to the cost of goods sold for a specific
period (cost of goods sold / average inventory). It measures how many times a
company sold its average inventory amount during the time period.
Days of Supply
The number of days it will take a company to sell all of its inventory (365 x
(Average Inventory / Cost of Goods Sold).
On-Time Shipments
Percentage of shipments delivered on time to customer order due date.
Inventory Accuracy
A percentage showing the variance between inventory records and actual count.
Order Fill Rates
Percentage of customer orders satisfied from stock at hand
(Benchmark data and categories from Tompkins Finished Goods Supply Chain
Benchmarking, 2013)
14. Summary
Inventory strategy is based on Analytics, Voice of the customer,
economic conditions, market intelligence, innovation
Operational control of inventory
ABC Analysis
A items- careful controls, deliver to schedule (just in time techniques)
B- batching rules for EOQ EBQ to obtain discounts and volume benefits
C- Implement simple policy controls e.g. Use analytics to balance costs v/s sla’s,
change supply strategy (e.g. make to order) based on part behaviour. Minimize internal
variety and maximize external variety!
INVENTORY MANAGEMENT IS NOT A RANDOM SET OF INVENTORY CONTROL TECHNIQUES
IT IS PART OF A WELL THOUGHT OUT STRATEGY OPTIMIZED USING ANALYTICS TO BRING TOGETHER ALL
ASPECTS OF THE SUPPLY CHAIN