'Balancing Inventory to meet Customer Demand'
The product profile
Every product has its own unique usage profile; which can include the
various attributes of trend, seasonality, regularity and exceptional
demand. Take a couple of minutes to look at inventory optimisation
Enterprise Resource Planning (ERP) offers a ‘one size fits all’
solution, based on simple averaging, and leads inevitably to stock
imbalances. This results in the co-existence of shortages, excesses and
generally overstocking together with poor customer service levels.
The product mix
The 80/20 principle is relevant here with 20% of the products,
providing 80% of the sales turnover. These products generally have
regular demand patterns, although there may also be elements of trend
and seasonality present. There may be the odd irregular usage product
in this category. These would generally be of comparatively high unit
value and would need to be identified and dealt with separately.
'The good'
The
bulk of this group of products, might also be known as A-class items in
the traditional ABC classification. This group would lend itself to
statistical analysis, thereby developing safety stock levels by
individual product, appropriate to a given confidence (i.e. customer
service level). Providing exceptional demands are filtered out, these
A-class items would be stock optimised.
'The not so bad'
Roughly the next 30% of products, equivalent B-class items, would be responsible for 15% of the total sales turnover.
'The ugly'
The final 50% of the products are C-class and responsible for the remaining 5% of sales turnover. These products are
either of low value (tending to be physically small and occupying
little shelf space) and can be tolerated, or non/slow-moving high value
products, that shouldn’t be held in stock and are subject to
write-off. The objective of a coherent stocking policy should be to
prevent the latter falling into the C-class category.
The solution
We
implement solutions to classify and optimise stocks, resulting in both
reduced inventories and improved customer service levels.
Regain control of your inventory. For a FREE inventory 'Healthcheck',
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Inventory Management 
