It’s 2018. Make this the year your organization achieves the goal of effective inventory management. That is, to meet or exceed your customers’ expectations of product availability with the amount of each stocked item that will maximize your organization’s profitability or minimize its inventory investment.
Through our consulting services, we develop custom plans for individual organizations and help them through the implementation of the program. But, you can start this process on your own by following our “12 Step Plan”:
1) Make sure that all material movement is properly recorded
2) Develop an approved stock list. Separate the material that you want to stock from the stock that needs to be liquidated
3) Verify that the lead times for all items to be stocked are set to the longest normally anticipated lead time
4) Separate products to be stocked into items with sporadic usage and those with recurring usage
5) Determine the average sales or usage quantity for each item with sporadic usage
6) Set minimum and maximum stock quantities for items with sporadic usage based on a multiple of the normal quantity sold or used in one transaction
7) Determine the best forecast method for each item with recurring usage. That is, the method that results in the lowest difference between the forecast and actual sales/usage.
8) Set safety stock quantities for each item to ensure that your company achieves the desired level of customer service
9) Calculate replenishment parameters for each item with recurring usage based on these accurate forecast and safety stock quantities
10) Determine turnover and profitability goals
11) Analyze possible unusual usage at the end of each month – Adjust usage history as necessary to correct for activity that probably will not recur
12) Measure progress each month in achieving predetermined goals
What better time than the start of a new year to get started on achieving effective inventory management? Have you completed any of the steps? Are you committed to achieving the goal of effective inventory management in 2018? The time to take action is now!