Inventory and Customer Service optimisation
We need inventory for a variety of purposes – because lead-time is longer than customers are prepared to wait and we need to buffer against forecast inaccuracies, because we need to cover for future spares demand when components are to be discontinued, even because we are unsure of quality and need to have replacements. We used to do a lot of inventory reduction projects for clients in the 1990′s, but we thought they had gone away. However, because of the amount of cash involved they seem to be back. It is surprising how many businesses plan their inventory using their ERP system, but don’t put the clarity of thinking into why they want the inventory and how they should drive the calculations using the IT system. The system output is then followed almost blindly resulting in random inventory for questionable purpose. Our approach is fairly exacting – define the reasons for inventory and then use system parameters under strict rules and guidelines to plan schedules. We sit with planners to make sure they know how to drive the system, know what results they expect and are able to measure if the results are satisfactory.