Not having a good handle on your inventory needs can lead to excess and slow moving inventory. Without proper inventory management one can watch their inventory overhead slowly climb out of control. Have you asked yourself, “How do I combat my slow moving inventory issues?” or “What am I going to do with all of my slow moving/obsolete inventory?” Or maybe you find yourself with excess inventory that can both tie up working capital and valuable real estate. These are both common issues in the industry today.
With an inventory system that is driven by data, the goal is to ensure that you always have material where you need it, when you need it, in the most efficient manner. A system driven by data can look at trends to identify accurate usage, slow moving inventory, and efficient replenishment values for all items. Here are a few data points that can be analyzed to ensure you are proactively managing your inventory:
- Part Usage
- Part Value
- Part Volatility
- Transit Time
- Replenishment Method
- Replenishment Frequency
- Customer Turn Goal
- Customer Requirements
The first step in getting a data driven system setup, is to properly understand your turn goals and long term objectives. Is your goal to reduce on hand inventory? Maybe your goal is to ensure your production line never runs out of parts. A data driven inventory system can accomplish both of these objectives and you should be a part of setting these requirements. Below are a few things you should be able to adjust and customize to reach your goals:
Customize turn goals based on bin annual value.
- Replenish high dollar parts on a frequent base. Replenishment frequency depending on your turn goals?
- Replenish low dollar parts on a less frequent basis. Replenishment frequency depending on your turn goals?
Customize Minimum Bin Value
- Reduce or increase minimum bin value based on the customers on hand inventory reduction objectives.
Once the system and goals are set, you can let the data drive the rest. As orders are being placed and the system is capturing more and more data, you will see the system begin to lean itself out. The system will identify when bin replenishment values need to be adjusted to meet your objectives. So as the climate changes whether up or down, your new data driven inventory system will identify the trends and adjust with you. Ensuring that you continue to have parts where you need them, when you need them, in the most efficient manner.
If you currently don’t have a data driven inventory system, feel free to call on one of our Field experts to discuss with you the value in adding data to your system. Here are some of the data points we use to help our customers create the most efficient system possible:
- Parts trending toward slow moving.
- Parts identified as volatile
- Parts requiring additional bin space to meet replenishment goals to reduce part volatility.
- Estimated on hand inventory reduction.
- The effects the system has had on your on hand inventory
- Estimated cost savings due to reduced transitions.
- Efficient replenishment results in less line processes and PO generation.