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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...

Excess Inventory Analysis

We frequently find it helpful to identify and rank order root and systemic causes of excess inventory. An example completed for a large HVAC client is depicted below. In this case the root causes in rank order are (1) large order releases required by Chinese suppliers (33.9% = $1,210,864), (2) mis-sized purchased orders with other suppliers (31.5% = $1,126,000), (3) MRP data errors (11.2% = $401,000), and (4) poorly negotiated minimum order quantities (4.93% = $176,319 ).

The RightStock™ Root Cause Analysis gave birth to an extensive project plan aimed at eliminating non-value added inventory. The plan is presented below. Not every plan works, but this one led to the plant being named one of America’s Ten Best Plants by Industry Week. The plan moves through four major phases – stabilization, optimization, automation, and collaboration. The entire plan yielded an inventory reduction in excess of $7 million; a reduction in days-on-hand from 35 to 21; and an increase in on-time delivery performance from 93.5% to 97.5%.

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