Inventory Mgmt
18th May 2011
Table of Contents
Need for Inventory Underlying Principles Current Philosophies of Inventory Mgmt
Pros and Cons of IM Principles
TOC and MEIO Primary Needs of an Effective IM System MapMySupplyChain
5/27/2011
Strictly Private & Confidential
2
Need for Inventory
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
To tide against Supply Chain Uncertainities – Transporter uncertainity, Supplier Lead
Time, etc.
Ensure all Customers, at every location are served at the right time, with the right
quantity
Normally, Sales People would like to Stock up, as much Inventory as possible, so that
Stock Out scenarios are ruled out
On the other hand, the CFO would like to cut inventories, so that the capital costs are
kept in check
If Planned properly, Inventory will have a positive impact on Customer Satisfaction If Planning of Inventory is inaccurate, then it leads to either:
Stock outs, Customer Dissatisfaction, lost sales and indirect cost increase or Increase in Capital Costs, Obsolescence and raises Operational challenges
5/27/2011
Strictly Private & Confidential
3
Underlying Principles
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
Underlying assumptions that define a Supply Chain Inventory model is often
conflicting. This is depicted in the figure.
Underlying principle conflict
5/27/2011
Strictly Private & Confidential
4
Current Philosophies of Inventory Management
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
Inventory Management in the current context, is designed to be held closer to the customers
But not all products/SKUs can be held close to the Customers, at all times. This means there would be further classification of SKUs as fast moving, slow moving, etc. and then the fast moving
Table of Contents
Need for Inventory Underlying Principles Current Philosophies of Inventory Mgmt
Pros and Cons of IM Principles
TOC and MEIO Primary Needs of an Effective IM System MapMySupplyChain
5/27/2011
Strictly Private & Confidential
2
Need for Inventory
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
To tide against Supply Chain Uncertainities – Transporter uncertainity, Supplier Lead
Time, etc.
Ensure all Customers, at every location are served at the right time, with the right
quantity
Normally, Sales People would like to Stock up, as much Inventory as possible, so that
Stock Out scenarios are ruled out
On the other hand, the CFO would like to cut inventories, so that the capital costs are
kept in check
If Planned properly, Inventory will have a positive impact on Customer Satisfaction If Planning of Inventory is inaccurate, then it leads to either:
Stock outs, Customer Dissatisfaction, lost sales and indirect cost increase or Increase in Capital Costs, Obsolescence and raises Operational challenges
5/27/2011
Strictly Private & Confidential
3
Underlying Principles
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
Underlying assumptions that define a Supply Chain Inventory model is often
conflicting. This is depicted in the figure.
Underlying principle conflict
5/27/2011
Strictly Private & Confidential
4
Current Philosophies of Inventory Management
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin
Inventory Management in the current context, is designed to be held closer to the customers
But not all products/SKUs can be held close to the Customers, at all times. This means there would be further classification of SKUs as fast moving, slow moving, etc. and then the fast moving