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KNOWLEDGE LIBRARY

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27Jun

Warehouse Occupancy Percentage

Optimal storage utilization helps enforce healthy inventory management. In our early work with Honda their...

02Jun

Efficient Procurement Inventory

Efficient procurement inventory (EPI) is often required to realize steep discounts when a special opportunity...

02Jun

Inventory Carrying Rate

The inventory carrying rate (ICR) is the percent of the unit inventory value used to...

26Jun

Inventory Activity Profiling & Data Mining

Suppose you were sick and went to the doctor for a diagnosis and prescription.  When...

27Jun

Inventory Performance Measures

Inventory performance measures include financial, productivity , quality, and response time indicators for evaluating the efficiency and...

SKU Profitability Profile

The item sales activity profile ranks and classifies items based on $ and unit sales.  The A category is typically comprised of the top 5% of items and they normally account for approximately 80% of sales activity; the B category the next 15% of items normally accounting for approximately 15% of sales; and the C category the remaining 80% of items accounting for the last 5% of sales.  These three categories often makeup natural dividing points in the creation of a segmented customer service policy.

If possible an item profitability profile can be used to weed out some items from the customer service profile.  An example item profitability profile is provided below.  Note that in the analysis less than one third of the items are profitable.  Those are immediate candidates for purging.  In many of our client studies a majority of the items do not even cover their logistics costs.

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