Proper inventory management can mean cost savings for a supply chain department but if no control measures exist then it's hard to determine if those cost savings are being realized. Holding inventory is costly but it could mean the difference between a sale and no sale. Many companies would rather hold inventory then loose a sale without realizing how much money they are loosing in the process.
Companies like Wal-Mart have mastered the art of inventory control and spend millions of dollars per year to perfect this art. Most companies don't have the same resources as Wal-Mart to manage their inventory. Simple inventory control metrics exist that can be implemented to make the process of measuring inventory easy.
These are inventory related metrics that all supply chain managers should look at:
- Average Inventory: Average amount of inventory carried. This can be tracked on a simple Excel spreadsheet.
- Products with High Levels of inventory: Identifies which products are carrying high levels of inventory.
- Average Replenishment Batch: Controls the replenishment batch measured by stock keeping unit.
- Average Safety Inventory: Measures the average amount of inventory on hand when a replenishment order arrives.
- Seasonal Inventory: Measures the amount of both cycle and safety inventory purchased due to seasonal changes.
- Fill Rate: Measures the orders that were met on time over a specified number of units.
- Fraction of time out of stock: Measures the time that a particular product had zero inventory.
These measurements can be easily tracked by a supply chain analyst in an Excel spreadsheet. Keeping historical data of the metrics can be used for trending and other managerial purposes.
No comments:
Post a Comment