6.1_ inventory reduction strategies 2016

8/16/2019 6.1_ Inventory Reduction Strategies 2016

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Inventory reduction strategies

Inventory performance

models are wrong, but some are us

So said the statistician George Bo“!oate modelele sunt greite, dar unele suntutile#


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Methods for inventory reduction (1):$. Improve forecast and demand planning – use an integrated

approach S&OP(Sales and Operations Planning) or SIOP (Sales andInventory Operations Planning) process to etter coordinate sales!

"ar#eting! $nance and "anufacturing or M%IO ("ulti echelon inventoryopti"iation)

%. Inventory segmentation and segment strategy de&nition 'reduce variability demand

(. )se *ull'*ush model or use *ostponement strategies 'reduce variability demand

+. )se technology to gain real'time supply chain visibility,such as

• supply chain inventory levels (this helps you tosynchronie supply 'ith de"and)

• -rder Status ' Order "anage"ent “hu

. Inventory /ontrol:a. /ontinuous or periodic review for replenishmentb. 0anaging inventory in the S/ 1 use 02I- or !ransfer the ecess

stoc3 to another company location 'here the inventory is neededc. *eriodic review to identify slow'moving and obsolete products

4S5-B6 – decide selling strategies

d. *erform AB/ analysis on the products to identify fast "overs andslo' "overs


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Methods for inventory reduction (0):. Inventory control 4continued from previous slide6

e. Improve Inventory 7ecord Accuracy by continuous or periodicreview

eplaces an annual inventory physical inventory count y asyste" 'here part of the inventory is counted every day! andeach ite" is counted several ti"es per year

8. Supply /ontracts – 9or3ing with suppliers to improvereliability ($ailitatea) y developing a 'in to 'in relationship toreduce supply lead ti"es variaility or ho' to "anage de"anduncertainty/

:. Strategic Alliances – ho' you "anage supplier-uyer partnership +ollaorative Planning! 2orecasting and eplenish"ent 4/*;763uic# esponse 4. Add some technology and reduce transaction delays4inbound, in'store and outbound transactions6.

?. 7eduction of the product portfolio

$@. 2ncourage product substitution$$. 2ncoura e more vendor consi nment stoc3.


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Methods for inventory reduction (5):$%. 7educe safety stoc3 levels by• 7educe order supply cycle time '$nd closer suppliers and

negotiate smaller! more freuent deliveries fro" suppliers

• *ool safety stoc3 for multiple locations – stoc de sigurantacare sa deserveasca "ai "ulte centre de distriutie (stocul desiguranta pentru acelas nivel de servire creste odata cu crestereanu"arului centrelor de distriutie din retea – stoc de siguranta indepoitele centrale pentru produse care au cerere "ica) seeInventory multi'stage optimiation

$(/


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!he concept of/losed 5oopInventory

management

%vent"anage"ent


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+onclusionsInventory management is not a stand-alone business process that occurs

after other processes are complete.

It is a high-level process that should be integrated into other supply chain

planning processes including, at a minimum, sales and operations planning,

master production scheduling and supply action management. Inventory

managers should support multiple business objectives and should havebusiness integrated targets related to inventory levels, customer service

levels, total inventory cost, andinventory quality.

https://www.gartner.com/doc/2989017/inventory-quality-ratio-inventory-performancehttps://www.gartner.com/doc/2989017/inventory-quality-ratio-inventory-performance


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Inventory Manage"ent

1/ hen to place an order0/ ;o' "uch to order

Structure of inventory"anage"ent syste"

+ontrol variales

Strategic

Tactical Inventory costs - ordering

- holding - purchasing - shortage

• hy does inventory ?uctuate and'hat strategies "ini"ie this

Syste" criteria

•

/ostobFectives

•/ustomer

ServiceobFectives


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Inventory Manage"ent O,ectives

$. ow often to reviewH

% 9hen to place an orderH

(. ow much to orderH

+. ow much stoc3 to 3eepH

• Inventory "anage"ent is a &nancial trade'o between cost obFectives

4inventory costs6 and customer service level 4shortage costs 'stoc3 availability6 / !he obFective of inventory management is to provide uninterrupted production! sales! and@or custo"er-service levels atthe "ini"u" cost/

–. Ahe "ore stoc#! the "ore 'or#ing capital is needed and the "ore stoc# depreciationyou get/

–.On the other hand if you do not have enough stoc#! you get inventory stoc#-outs!"issing potential sales! possiility interrupting the 'hole production process/

/ustomer Service

i/e/! Stoc# vailaility (service level)Inventory costs 4/arrying, -rder,Stoc3'out6

•ServiceobFectives

•/ostobFectives

http://www.businessdictionary.com/definition/objective.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/production.htmlhttp://www.businessdictionary.com/definition/sales.htmlhttp://www.businessdictionary.com/definition/customer-service.htmlhttp://www.businessdictionary.com/definition/cost.htmlhttp://www.businessdictionary.com/definition/cost.htmlhttp://www.businessdictionary.com/definition/customer-service.htmlhttp://www.businessdictionary.com/definition/sales.htmlhttp://www.businessdictionary.com/definition/production.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/objective.html


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hat drives inventory in the supply chain>(2actorii care in?uenteaa nivelul stocului)

•Service level – 'hat is the co""it"ent internally and to thecusto"er> ;igher service level re.uires "ore inventory thanlo'er> hat do you really need to succeed> hat are thedesired transportation "odes> re you eBpediting ship"ents>

•5ead times 4durata aproviionarii6 – inventory is"aintained to cover for the 'ait to replenish it/

•Jemand and variability – of course forecast and variailityi"pact inventory - the higher the variaility the "ore inventoryis needed/

•7eorder freuency and uantity

•!ransportation times and variability

•Inventory positioning across the supply chain – 'hereyou #eep the inventory in the supply chain can "a#e a ig

diCerence/•7is3 in the system – ho' "uch inventory do you need to


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+D%EA S+M PIOIAI%S

"erican Productivity and 3uality+enterInventory Is a /ost to Be 0anagedH

A freuent mista3e made in the management of inventory - acorporate "andate to reduce inventory/ Inventory should never e "anagedto a $nancial target/ Instead! it needs to be based on the reuirements


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+D%EA S+M PIOIAI%S

"erican Productivity and 3uality+enterInventory Is a /ost to Be 0anagedH

A freuent mista3e made in the management of inventory - acorporate "andate to reduce inventory/ Inventory should never e "anagedto a $nancial target/ Instead! it needs to be based on the reuirements


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Ahe trade-oCs et'een inventoryinvest"ent and custo"er service

($ll rate)>

Safety Stoc# - "anaginguncertainty in the Supply +hain

+ycle Stoc# – Stocul curentSafety Stoc# – Stocul de

for inventory reduction 1 selectively reducing the level of custo


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=ariante de calcul Kivel de Servire 4;ill 7ate or Availability6

$. Item ;ill 7ate 4?>.C6 : Aotal number of items shipped or supplied/ the total number ofitems ordered. In tael din totalul de 1F1F produse co"andate nu s-au livrat 17! adica: Ite" 2illateG(1F1F-17)@1F1FH1FFG6/78/

/at la C din articolele comandate au fost livrateH %. !he line item &ll rate the percentage of line ite"s on the order shipped in their entirety/%Be"plu: o co"anda are 1F linii de produse/


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+OSA O*L%+AI4%S - Inventory +osts -$. -rdering /osts: Ahe direct laor costs in Purchasing and

arehouse operations associated 'ith PO (purchase order) - costsof placing and receiving an order- cost of processing orders : %nter [email protected] and any pproval Steps!

such as for"s (docu"ents)! papers! laor(clerical costs)

- cost of trac#ing orders

- cost of receiving and inspecting the purchased ite"s inclusive handling

(unloading) and puta'ay costs/- +ost of Invoice Process and 4endor Pay"ent

0/Setup /osts: Ahe costs of preparing e.uip"ent and facilities so they can eused to produce a particular product or co"ponent

Examples: setup labour, lost income (from idled facilities), and test

runs. When a rm produces the goods internally, ordering costsare replaced by setup costs.

5/+arrying +osts: Ahe costs of #eeping inventory – se calculeaapentru o anu"ita perioada de ti"p! de oicei un an de ile

It includes: insurance, obsolescence, opportunity cost of funds tied up in

inentory, handling costs and storage space.


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Inventory +osts(continued)

K/Stoc#out +osts: the costs of not having sucient inventory (costul de penurie saucostul rupturii de stoc) – =ost sales and pro$t! (valoarea vanarilor nerealiate)

– %Bpediting and ac# ordering eBpenses! (cheltuieli supli"entare cu cererea neonorata:co"anda aproviionare ! "anipulare! a"alare! eBpediNie! etc)

– +ost of reputation and good'ill (lost custo"ers on long ter"s)

– +heltuieli de penaliare (nerespectarea clauelor co"erciale)

– +osturile cu lipsa "ateriilor pri"e (sau piese de schi") ce afectea procesul si costurilede producNie/

+S G (E


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9hat is Inventory /arrying /ostH

• Inventory carrying cost is a ratio 'hichdescries the relationship et'een thecost-of-o'ning-inventory-per-year and

the inventory value/• 2or eBa"ple! if your inventory carrying

cost is 078 and your annual average

inventory is Q1Million! then your annualcost of o'ning inventory is Q07F/FFF/


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l f + i +


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1

%Ba"ple of +arrying +ost(costurile anuale de pastrare a unui articol in stoc)

nnual +ostPercentage ofProduct 4alue

(8)+apital +ost (costurile de oportunitate ale capitalului

investit in stocuri-randa"entul in investitiialternative de risc apropiat sau doanda dei"pru"ut a capitalului investit in stocuri)

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Storage space (a"ortiare! inchiriere! intretinere!utilitati! eBtra cost "anipulare stocuri speciale:perisaile! toBice! in?a"aile)

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Inventory service (cheltuieli cu forta de "uncapentru "anipularea $ica a produselor! asigurare!

i"poite (taBe! paa) 58

Inventory is# +ost (depreciere! deteriorare! uura"orala! furturi! incendii! pierderi! relocare)

8

Aotal

07 8

din valoarea"edie anuala a

stocurilor Ahe rule of thu" for inventory carrying cost is et'een


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16

Inentory and !ost Information for!omputer "ard #is$s

4anarea "edie sapta"analaG1FF uc+ostul unei co"eniG0FFQ

Pret de achiitie 1FFQ@uc+arr in cost : 078


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InventoryLs /onMicting /ost*atterns

+ o s t

Order (eplenish"ent) .uantity

Stoc#outcost

Ordering cost

+ a r r y

i n g

c o s t

Aotal cost 0inimum cost

reorder uantity

%ource: !& (') *rentice "all, In

Interpretare: co"eni "ai rare prin cresterea cantitatilor peo co"anda conduce la: reducerea costurilor deco"anda(ordering cost)! a costurilor datorate rupturilor destoc (stoc#out cost) deoarece stocul este "ai "are decatcererea dar si la cresterea costurilor de gestiune (carryingcost)/


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!erminology and calculations

• 5ead time G supplier or "anufacturing lead ti"e ti"e toinitiate the purchase order or 'or# order including approvalsteps ti"e to notify the supplier the ti"e to processthrough receiving and any inspection operations/

• -rder cycle. lso called replenish"ent cycle! order cycle

refers to the time between orders of a speci$c ite"/ Mosteasily calculated y dividing the order .uantity y the annual

de"and and "ultiplying y the nu"er of days in the year/• ;orecast period/ Ahe period of ti"e over 'hich a forecast is

ased/ !he forecast period used in the safety stoc3

calculation may dier from your formal forecastperiods/ 2or eBa"ple! you "ay have a for"al forecastperiod of four 'ee#s 'hile the forecast period you use for thesafety stoc# calculation "ay e one 'ee#/


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Aheoretical Inventory Model

7eorder *oint with a Safety Stoc3

+ariable demand ith %afety %toc$ to satisfy de"and that eBceeds the a"o

Reorder

point, R

Q

Lead Time

L

I n v e n t o r y

l e v e l

0

Safety Stoc3

Placeo

rder

Receiv

eorder

Time

3 – order.uantity

4durata dereaproviion

are6

-rder cycle 'intervalulde timp

Nntre douOaproviion

Orisuccesive

Jemand rate


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Inventory Manage"ent Prole"s

)ncertainty in inventory management

• Inventory policy "ust deal 'ithuncertainty – *urchasing cycle uncertainty R ho'

long 'ill it ta#e to replenish inventory'ith our custo"ers>

– Jemand uncertainty R 'hen and ho'"uch product 'ill our custo"ers order>

• 4ariations "ust e considered in

oth areas to "a#e eCective


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Both two factors are subject to uncertainties• demand variations: customer behaviors can evolve

in rather unpredictable ways.• lead time variations: suppliers or transporters may

be faced with unplanned difficulties.

%Ba"ple:


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Methods for inventory reduction

- 7educe supply lead times variability '0easure supplier lead time performance and put theinformation to wor3

=ead ti"e is a "a,orfactor in deter"ininginventory levels – Supplier lead ti"e

variaility in?uencesre.uired safety stoc# level

– Measure"ent of actuallead ti"e perfor"ance

helps ensure ade.uateuCer for supply variaility

– Measure"ent #ey fordriving support actions toi"prove lead ti"e and

reduce variaility

Purchasing cycle uncertainty "eans operations cannot


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Purchasing cycle uncertainty "eans operations cannotassu"e consistent delivery

/alculation of Standard Jeviation of 7eplenishment/ycle Juration

GΣ

(x - x)n

2

/alculul medianei 4punctul central al seriei6a) Se sorteaa cresc@desc sirul de nu"ere) Pentru o serie cu nu"ere pare!


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Purchasing cycle variation analysisusing a nor"al distriution

Kormal JistributionAnalysis of supplierLs deliveriesistory

Interpretare statistica termenele de aproviionare reale se aMa

in intervalul PQ' $ sigma in proportie de aproimativ 8>C, in PQ' %sigma apro. ?.C si in PQ' ( sigma in apro. ??,:(C din cauri

If T G 0 'e should eBpect:

U8 of the supplierVsdeliveries to e et'een -10days

68 of the supplierVsdeliveries to e et'een U -1Kdays

66/8 of supplierVs deliveriesto e et'een K – 1U days

T GdeviaWia standard


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- 7educe supply lead times '

5ead time is a maFor factorin determining inventorylevels

– ggressively reduce lead ti"e asthe est oCset (co"pensatie) to

i"perfect forecasting – +hanges in lead ti"e often do

not get updated in planningsyste"s

7emar3s. S"aller "ore fre.uentorders result in lo'er average

inventory! ut can increase otheradditional costs (order cost!transportation cost! etc)/

See also! LIA/

Stoc "ediu G cantitatea

co"andata@0vera e inventor G @0


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Inventory


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' 7educe demand variability by seg"ent strategyde$nitions to "a#e i"prove"ents of forecasting -

Inventory management practices for InventorySegmentation

• *roductQmar3et classi&cation groups products! "ar#ets! or custo"ers'ith si"ilar characteristics to facilitate inventory "anage"ent – %/g/ classify y sales! pro$t contriution! inventory value! usage rate or ite"

category

• Segment strategy de&nition speci$es all aspects of inventory"anage"ent process for each seg"ent of inventory – %/g/ service o,ectives! forecasting "ethod! "anage"ent techni.ue! and revie'

cycle• *olicies and parameters "ust e de$ned at a detailed level

– %/g/ data re.uire"ents! soft'are applications! perfor"ance o,ectives! and decisionguidelines


Segmentarea produselor din stoc imbunatateste acurateteaprognoei produselor cu cerere variabila si creste implicit

gradul de onorare a comenilor clientilor.


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7educe demand variabilityby Seg"ent strategy de$nitions

Supply +hain: Eo “-ne Sie ;itsAllKot all SD)s are the same! not all

orders are the same and not allvendors are the same/ Aherefore!your supply chain cannot e a onesie &ts all# "odel/ In su""ary! todesign a Supply +hain ale to provide

an opti"al cost solution to "eetcusto"ers re uire"ents understand


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;orecast principle$. ;orecasts are 4almost6

always wrongs.%. ;orecasts are more accurate

for groups than for singleitems – 7is3 pooling

(consolidati cererile clientilorpentru aceleasi produse si apoiefectuati prognoa! nu efectuati"ai intai prognoele cererilor deproduse pe $ecare client si apoiinsu"ati prognoele)/ Pentruprognoa pe perioade "ari deti"p! grupati "ai intaiprodusele pe diverse criterii siapoi efectuati prognoa pegrupele de produse otinute/ In

$nal! deagregati prognoeleefectuate pe grupe de produse


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Inventory ased on productclasi$cation

• Eiveluri terapeutice


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SD) strati&cation AQBQ/ is diTcult in a fashion business


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5

Item -nnual %ales

nits nit *rice -nnual %ales

Euro

*ercentageof otal

E&0%ales

1

7!FFF \ 1/7F \ X!7FF 0/68

0

1!7FF /FF 10!FFF K/X8

5

1F!FFF 1F/7F 1F7!FFF K1/08

K U!FFF 0/FF 10!FFF K/X8

7

X!7FF F/7F 5!X7F 1/78

U

U!FFF 15/UF 1!UFF 50/F8

%Ba"ple of SZD list for 1F ite"s


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56

*+ +hart for SZD =ist

A !


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KF

*+ +hart for SZD =ist

A !


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Sa"ple illustrating seg"entstrategy de$nitions

+P2- a supplier – uyer partnership for planning and forecasting"ar#et de"and


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Segmentation in Supply /hain'Inventory segmentation based on customer

service '

• +usto"er 'ho re.uires a custo" part fro"

"anufacturer lo' volu"e high variaility (Pull "odel!"a#e to order)

• +usto"er 'ho re.uires a co""odity high volume,low variability ' (Push "odel! "a#e to stoc#)

• +usto"er 'ho per"it ac#order (after "ar#et productsvs/ the sa"e products used in "a#ing other products-production)


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+orelatia volu" - variailitate cerere

Segmentation


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Segmentation'Segmentarea pe canale de distributie'

2or eBa"ple! a high-tech consu"er electronics co"pany typicallydeals 'ith multiple channels:

– retail, – distributor,

– 2nterprise customers

– 9eb customers

%ach of these channels should have diCerent replenish"ent progra"s/

2ample

• 2nterprise customers "ight e served through a co"ination ofcon&gure'to'order and build'to'stoc3 strategies 4*ush'*ull6.

• 7etail customers! "ean'hile! could e served through build'to'stoc3 along 'ith a co"ination of distriution resource planning(


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Analia calitatii stocurilor 1 deciiireferitoare la strategia de vanare stocurilor

• Analiati periodic calitatea stocurilor 4viteade rotatie si vechime6 pentru

– 2laborarea propunerilor de valori&care aacestora 4vanari, donatii, etc6 catre

departamentului de mar3eting si vanari – Analia caua'efect stocuri in eces si

rupturi de stocuri, elaborare de actiunicorective

- Methods for inventory reduction -*eriodic review to identify slow'moving

and obsolete products 4S5-B6 – decide

selling strategies

A li lit tii t il b it i d


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Analia calitatii stocurilor pe baa viteei derotatie %volutia lunara a stocurilor (valori asolute)

Analia calitatii stocurilor pe baa viteei de rotatie

% l ti l t l i ( l i l ti )


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%volutia lunara a stocului (valori relative)


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nalia calitatii stocurilor pe aa vechi"ii


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p(ter"ene de eBpirare)

nalia detaliata pe produse va eBtrage oferta de vanare a produselorcu ter"ene de eBpirare apropiate


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%valuarea calitatii stocurilor prinanalia caua –efect


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0inimum order uantities drive to higherinventory levels 4ecess stoc36

• Mini"u" Order 3uantities (MO3) onlo' volu"e ite"s "ay re.uire you toorder "ore than an “opti"al.uantity

• Ite"s 'ith high MO3 can lead toeBcess on-hand inventory]

• ]ut the order fre.uency is greatlyreduced resulting in fe'er“eBposures to the "ini"u" stoc#level and fe'er potential stoc#-outs

• Safety stoc#s ased on the lo'ervolu"e orders should not e applied

to high MO3 ite"s• ;igh MO3 ite"s can e planned 'ithlo'er relative safety stoc#s 'ithouti"pacting $ll rates over the longter"


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Methods for inventory

reduction)se *ush'*ull Strategy!o reduce inventory level0a3e to -rder by *osponement strategy


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77

+hoosing *et'een Push@Pull Strategies – ppropriate Supply +hain

PullPush

Pull

Push

%cono"ies of Scale=o' ;igh

=o'

;igh

< e " a n d D n c e r t a i n t y

Industries 'here:

• +usto"iation is ;igh•


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Push- versus Pull-*ased Supply +hain Models

SDPP=^ +;IE ME_%M%EAS^SA%MS

P h P ll S l +h i


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Push-Pull Supply +hain

• typical push syste": P+ "anufacturers 'ho build to stoc$ and "a#e all production and distriution decisions ased onforecast/

• push1pull strategy: the "anufacturer builds to order / Ahisi"plies that component inentory is "anaged ased onforecast (push-ased)! ut nal assembly is in response to aspeci$c custo"er re.uest (pull-ased)/ his push1pullboundary is at the beginning of assembly.

• Ahe interface et'een the push-ased stages and the pull-1

“_eneric Product “+usto"ied Product



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*ool safety stoc3 for multiple

locations

Methods for inventory reduction- 7educe safety stoc3 levels '

Inventory positioning across the supply chain – 'here you#eep the inventory in the supply chain can "a#e a ig diCerence/

M th d f i t d ti


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76

Methods for inventory reduction-Inventory ecord ccuracy-

• Inaccurate inventory records can cause – =ost sales –


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Inventory ccuracy using MS

Ahe arehouse Manage"ent Syste"(MS) co"ponent have to support thefollo'ing inventory "ethods:

– nnual inventory count (also called

periodic inventory) – +ontinuous inventory – +ontinuous inventory during stoc#

place"ent – +ontinuous inventory ased on ero stoc#

chec# – +ycle counting – Inventory sa"pling – dhoc (Select and +ount) – 3uant ( single "aterial ` in "iBed

storage in)


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MS - nnual Inventory

ôu use this inventory "ethod for storagetypes! for eBa"ple! for 'hich the

continuous inventory "ethod should not eused/ ôu can also use this "ethod to ta#ean inventory of the storage ins and in.uantities that are nor"ally su,ect to a

continuous inventory "ethod ut had no"ove"ent in the current $scal year/


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MS - +ontinuous Inventory

ith the continuous inventory "ethod you ta#e inventory on aselected nu"er of storage ins in a storage type/ Aheinventory can ta#e place at any ti"e during the $scal year/

– Ahe eCort for the inventory is not concentrated on acertain day or days ut is distriuted over the entire year/ Ahiscan result in a etter leveling of the 'or#load in the'arehouse/ – Inventory can e conducted during slo' ti"es in the'arehouse! for eBa"ple! during su""er vacation/

– hen an inventory is carried out on a continuous asis!up-to-date infor"ation aout the correspondence et'een the'arehouse stoc# and the oo# inventory is al'ays availale/


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MS- +ycle +ounting

+ycle counting in the arehouseManage"ent Syste" (MS)co"ponent "a#es it possile for you

to separate "aterials into classes(such as ! *! +///) and ta#e inventoryfor each class separately several ti"esthroughout the year/


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UK

+ycle +ounting %Ba"ple

distriution co"pany 'ishes to

count ite"s K ti"es per year! *ite"s 0 ti"es per year! and +ite"s 1 ti"e per year/ Ahere are

7FF ite"s! 5!7FF * ite"s! and11!FFF + ite"s/ Plan a cyclecounting procedure/


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U7

+ycle +ounting %Ba"ple

Eote:


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Methods for inventory reductionSupply +ontracts


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• Supply +ontracts*uyers and suppliers typically agree on supply contracts

• +ontracts address issues that arise et'een a uyer anda supplier

• *uyers and suppliers "ay agree on – Pricing and volu"e discounts

– Mini"u" and "aBi"u" purchase .uantities

–


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• Supply +ontracts – is# Sharing variety of supply contracts 'ill allo' for ris#

sharing! and increase pro$ts across the S+• *uy-ac# contracts

• evenue-sharing contracts

• 3uantity-?eBiility contracts

• Sales reate contracts ("anufacturer oCers areate to all 'ho purchase its product! such astic#ets or coupon)/

• _loal Opti"iation

M th d f i t d ti


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Methods for inventory reductionStrategic lliances

• +ollaorative Inventory eplenish"ent – 3uic# esponse (3) – +ollaorative planning! forecasting! and replenish"ent

4/*;76

– 4endor Managed Inventory (4MI)

7etailer'Supplier 7elationships ' 7S*

• +ooperative relationship et'een suppliers andretailers to use one anotherVs #no'ledge

• Suppliers have etter #no'ledge of lead ti"es andproduction capacities

• etailers have etter #no'ledge of de"ands

Aypes of SP


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yp


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yp=endor 0anaged System 4=0I6

lso called vendor'managed replenishment (4M) syste"

• Supplier decides on the appropriate inventory levels andthe appropriate inventory policies to "aintain these levels/

• Supplier suggestions initially approved y retailer• _oal of "any 4MI progra"s is to eli"inate retailer

oversight on speci$c orders/

• al-Mart and Procter & _a"le 4MI – Partnership! egun in 167 – ;as i"proved P&_Vs on-ti"e deliveries to al-Mart 'hile

increasing inventory turns

Advanced form of =0I Supplier co'location or UI! II – Ko longer referred to as UI! II

– SupplierLs employee is oTced in buyerLspurchasing department to forecast demand,monitor inventory V place orders with access to

sensitive &les V records

VMI Vendor Managed Inventory


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VMI – Vendor Managed Inventory

=endor 0anaged Inventory 4=0I6 :vendors@suppliers are responsile forreplenish"ent @ inventory service level of custo"ers

Strategies to co"at theull'hip eCect

7S* ' 7etailerSupplier7elationships

7@5F@1U X0

Virtual Stock Management


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Virtual Stock Management

7emar3s /ompanies moving more and more towardscentralied inventory planning and away from decentraliationof planning activities

Strategies to co"at theull'hip eCect

7S*'7etailer Supplier

7elationships

7@5F@1U X5

SP e.uire"ents


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SP e.uire"ents

•Presence of advanced infor"ationsyste"s

• Aop "anage"ent co""it"ent – %specially ecause infor"ation 'ill e

shared across co"panies• level of trust a"ong partners

– Supplier "anages retailerVs inventory

– etailer provides sales infor"ation tosupplier – educed inventory leads to space

savings

• Should not e given to co"petitors

SP Inventory O'nership


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SP Inventory O'nership• ho "a#es the replenish"ent decisions>

• ho o'ns the inventory until it is sold> – +onsign"ent relationship in 4MI progra"s• Supplier o'ns the inventory until it is sold



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Methods for inventory reduction2ncourage more vendor consignment stoc3

*roduse in /onsignatieQ/ustodie

+onsignee- *ene$ciar J +onsignor-



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yeduce Aranit Inventory

Stocul in !ranit

• *unuri care au fost livrate de catre vanator dar nu au a,uns inca lacu"parator/

• *unurile treuiesc inregistrate! in a cest ca! in posesia uneia din cele 0parti: vanator sau cu"parator in functie de ter"enii si conditiilegenerale ale vanarii/ +onfor" standardelor I2S stocurile potrepreenta un activ al entitatii nu"ai daca si co"pania are controlasupra respectivului stoc/

+ontrolul asupra stocurilor este asi"ilat cu dreptul de proprietate/

• In ter"eni generali produsele vor $ incluse in stocurile partii care este

responsaila cu costurile de transport/ ceasta responsailitate este"entionata in ter"enii de livrare ai vanarii cu" ar $: 2O*! 2S! +I2! etc/

In "o"entul in care are loc transferul titlului legal! riscurile si ene$ciilelegate de stocuri trec de la vanator la cu"parator/

Goods in !ranit* d i ! i l li ;-B


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'*roduse in !ranit 1 eemplu pentru livrare ;-B

Dna dintre erorile care se fac in privinta stocurilor este

de a considera ca titlul de proprietate asuprastocurilor este identic cu posesia &ica a stocurilor/



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y+hange the safety stoc# service level

• +hange the safety stoc# service levelfro" 68 (or 'here ever you have it)to 678/ %Ba"ple:

%Ba"ple:hat is the service level for an ite" 'ith annualde"and of 07!FFF units and an order .uantity of7!FFF units> Manage"ent 'ill tolerate only 1order stoc#out per year/

EG 07!FFF @ 7!FFF G 7

Service =evel G 7 – 1 B 1FF8 G F8

7

hat if theorder 3uantity

'as 1!FFF>

"#$


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InventoryZey Perfor"ance Indicators

Measure to "anage your inventory• !otal Inventor

y /ost:

http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/http://www.kinaxis.com/en/solution/supply-chain-planning-process/inventory-management/


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Measure to "anage your inventory•Inventory vs. targets: It should e possile to rea#do'n the SZD into various seg"ents! li#e *+classi$cation! "a#e vs/ uy parts! or y categories

speci$c to your organiation/ Ahis 'ill help youunderstand the driving forces ehind the data trends andidentify #ey opportunities/

ItVs also i"portant to understand 'hat portion of yourinventory is active! slo'-"oving! eBcess! and osolete/ Ireco""end the inventory .uality ratio for this one/


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0

+o"pany has annual cost of goods sold of Q1F!FFF!FFF/ Ahe average inventoryvalue at any point in ti"e is Q5K!U17/ +alculate inventory turnover and 'ee#s@daysof supply/• Inventory !urnover

%toc$ turns in businesses are di2erent such as spare parts ill be ery lo,say 1-3 times per year, in an FMCG business can be as high as 20 to 30times per year.

=itea de rotatie in ile: 5U7@Inventory Aurnover – arata nu"arul "ediude ile in care produsul sta in depoit sau Jays of Supply.

• 9ee3sQJays of Supply

Inventory erformance Measures

/-GS- costul unurilor vandute la pretul de achiitie (OE)Average inventory value – valoare "edie stocG(stoc initialnHstoc $nalperioada)@n1 (OE@luna)

nGnu"ar de perioade (luni! sapta"ani! etc)%8@Gnr ile lucratoareG70H7 ile

Os/ 4itea de rotatie este"ai "ica in caul utiliariinu"arului de ile lucratoareale perioadei! respectiv

1F days vs/ 1K days

t%rns2#&'()*#+,

-&+-*---*--

val%einventor.avera/e

sold /oodso0 costann%alT%rnover ===

da.s) wee1s(+2-,2&+-*---*--

&'*#+,

!345 wee1l.avera/e

val%einventor.avera/e5%66l.o0 7ee1s ===

da.s +-2#--&+-*---*--

&'()*#+,5%66l. o0 8a.s ==

Inventory Aurnover e"ar#s


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Inventory Aurnover e"ar#s

• 4itea de rotatie se calculeaa pe o serie de 1 an deile pentru nivelarea trendului si a seonalitatii dinseria de date/

• 4itea de rotatie depinde si de lungi"ea perioadei dereaproviionare/


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Jays of Supply;o' to ssess Inventory Stoc# Status

-the si"plest 'ay-

• Jays of Supply of on'hand inventory R 4-n'hand Inventory Q Average monthly demand6 %%wor3ing days

0onthly Jemandpril 1!07F

May 1!5UK

Lune 1!077

!otal (,>8?

Average monthly demand (,>8? ( 4three months of data6R $,%?@

-n'hand Inventory stoc3 R (,@@@

0onths of on'hand inventoryR(,@@@$,%?@ R %.( months of stoc3 on hand

Jays of SupplyR%.(%%[email protected] ile vanare

/oncluia stocul disponibil asigura @.8 ile vanare.

%toc$ turns in some businesses such as spare parts ill be ery lo,say 314 times per annum. Whereas stoc$ turns in an 56!7 business

can be as high as ' to 4 times per year.

4itea de rotatie a stocurilor in ile


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4itea de rotatie a stocurilor in ile

Inventory stoc# status


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Inventory stoc# statusevaluation

/ash'to'cash cycle time ' i"pacting


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or#ing capital

$nancial ratio sho'ing for ho' long a co"pany has to $nance itso'n stoc#@inventory/ It is calculated : stoc3 days P debtor days 'creditor days.%Ba"ple: co"pany 'hich #eeps its stoc# for on average of 0Fdays! 'hich gets paid y its detors on average 'ithin 5F days and'hich pays its creditors on average 'ithin K7 days! has a cash-to-

cash cycle of 7 days/ +o"panies that receive cash fro" their

2ill ate part of Perfect Order(_ d l d il )


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(_radul de onorare a co"enilor)

• Item ;ill 7ate • he item ll rate is the ratio of the total number of items shipped diided by the totalnumber of items ordered. Ahe line ite" $ll rate "easures the percentage of lineite"s on the order shipped in their entirety/ 2inally! the order $ll rate is a "easure ofthe percentage of orders shipped co"pletely/

•

• Benchmar3ing =alues

• Ao illustrate these $ll rate "easures! consider the order in the eBhiit/ 2irst! there area total of 7F5U ite"s on this order/ Since K1X of the ite"s 'ere shipped! the item llrate is

• Ite" 2ill ate G K1X@7F5U G 67/U 8

• "ore strict "easure is the line item ll rate/ Ahere are 1F lines of ite"s ordered!and of these 1F line ite"s! only 7 of the" 'ere $lled in their entirety! thus the lineite" $ll rate is =ine Ite" 2ill ate G 7@1F G 7F8 (Er/ =inii livrate integral@Er/ Aotal liniilivrate)

• 2inally! the order $ll rate is the percentage of orders $lled co"pletely/ +learly! thisorder counts in the un$lled category/ Ahis "easure is proaly the strictest of thethree "easures of custo"er service $ll rates discussed aove


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Inventory relatedt i


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"etrics

Inventory relatedt i (0)


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"etrics (0)

6.1_ inventory reduction strategies 2016

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