Professional Inventory Management
Authors: Geoff Relph; Witek Brzeski, Gail Bradbear
It can be difficult to determine when stock is at the optimum level as this is influenced by numerous factors including batching policies, the work centre capability, safety policies and production methods. The result is that despite the use of sophisticated MRP / ERP systems, manufacturers typically keep overall inventory levels too high without really achieving high parts availability. In many cases the response in production to poor availability is to over produce with intent to safeguard against future shortages. This paper is the second in a series of three that looks at the alternative options available to optimise inventory help at an aggregate and part level by considering the steps necessary to move towards inventory optimisation. The intent of these papers is to provide a guide to enable managers within manufacturing industries to advance their organisation to the next level.
In our first paper “The First Steps to Inventory Management” we looked at the basics beginning with the concept of control and a simple ABC classification system. This paper builds on the concepts developed in “The First Steps to Inventory Management” and assumes that inventory is under control and thet basics have been established by implementing a 3-class (ABC) system. Here we develop the options for managers to improve inventory performance by introducing the concept of overage, extending inventory analysis to 6 or more classes and considering the use and calculation of safety stock. The third and last paper “Advanced Inventory Management” looks at K-Curve theory and the impact of system parameters on stock levels. Each paper is structured along similar lines and contains background theory, the requirements for operating at the level under discussion, a worked example using data from the manufacturing industry and a concluding summary.