From Smart Inventory Solutions: 7 Actions for MRO and Indirect Inventory Reduction
Action #3: Eliminate Duplication
The third action relating to 'taking more out' is to eliminate duplication. By definition, duplicated items add no value and so should be a prime candidate for inventory reduction. There are a number of ways that items can be duplicated in an inventory system. Within a single store, the same or similar items may be held as different item numbers. Across a network of stores, the same or similar items may be duplicated when a shared access might be preferable.
Examples of duplication include:
Specifying new SKUs that are only marginally different from those in stock.
Holding the same item specified by different equipment suppliers using their own inventory codes. This is particularly the case where the OEM supplies the inventory.
Holding hold stock at two (or more) locations with safety stock at each.
Holding safety stock when your supplier holds safety stock as well.
Despite the advantages of computerization, inventories that consist of thousands of SKUs can be unwieldily to manage. It is unlikely that anyone knows everything that is held and it is also possible that more than one person is making recommendations on what ought to be held. With this degree of complexity, it is not just possible, it is likely duplication will occur. The message here is simple, seek to identify, and eliminate duplication.
The issue with duplication is not that the item is held twice; it is that duplication increases the safety stock that is held. (Recall that the safety stock...
Products & Services
Topics of Interest
Action # 4: Change the Factors That Drive Safety Stock Action #4 is the first of the actions relating to 'putting less in.' It was discussed previously that safety stock is used to act as the...
Unnecessary duplication is as wasteful as unnecessary effort. Key Idea Why do anything twice if once will suffice? Key Observations Duplication can be very subtle; it builds up in ways...
Action #5: Reduce Reorder Stock The average quantity of stock held across a period of time is a function of both the safety stock level and the reorder quantity. Action 5 is to focus on the reorder...
Richard Boedi Ulrich Schimpel 4.1 INTRODUCTION Risk management in supply chain management has many different aspects and facets. Usually, it is applied where uncertainties of the demand that...
Action #6: More Closely Match Delivery with Usage Up until now we have been looking at ways to reduce the physical number of items held. However, one of the variables that drive the cost of holding...