Every week I get at least one phone call or email asking “How do I get started on achieving 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.  Most of our programs follow the “EIM 12 Step Program”:

  1. Make sure that all material movement is properly recorded
  • Develop an approved stock list.  Separate the material that you want to stock from the stock that needs to be liquidated
  • Verify that the lead times for all items to be stocked are set to the longest normally anticipated lead time
  • Separate products to be stocked into items with sporadic usage and those with recurring usage
  • Determine the typical sales or usage quantity for each item with sporadic usage
  • Set minimum and maximum stock quantities for items with sporadic usage based on a multiple of the typical quantity sold or used in one transaction
  • Determine the best forecast method for each item with recurring usage
  • Set safety stock quantities for each item to ensure that your company achieves the desired level of customer service
  • Calculate replenishment parameters for each item with recurring usage based on the forecast and safety stock quantities
  1. Determine turnover and profitability goals
  1. Analyze possible unusual usage at the end of each month – Adjust usage history as necessary to correct for activity that probably will not reoccur
  1. 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 2019?  The time to take action is now!

Throughout the upcoming year, we will explore each of these 12 steps in our monthly newsletters.  In the meantime, please let us know if you would like you help in achieving your inventory-related objectives. Merry Christmas and Happy New Year!