INVETORY MANAGEMENT

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INVETORY MANAGEMENT

• Presented By
• Leydi Velez
• Ahmed Al Shaeef
• Herbert Guerrero
• John Herrera

EIN 5346 Logistics Engineering Chapter 9
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Agenda

• Contemporary Approaches to Managing Inventory
• Inventory Management Software
• Vendor-Managed Inventory (VMI)
• Just-in-Time (JIT)
• JIT Case Study

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• Inventory Management Software

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Inventory Management Software

• Benefits

• Eliminate manual inventory management processes
  thereby reducing errors and lead time.
• Provides managers easy access to the numbers that
  are needed for reporting and restocking
  information.
• Provides complete real-time visibility into
  demand, supply, costs and fulfillment measures
  and trends.
• Significantly improve your relationships with
  suppliers, vendors and partners by providing self
  service and real-time visibility.

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Inventory Management Software
Benefits Continued

• Improve demand planning/reduce forecast error
  rate
• Reduce lost sales and backorders
• Increase inventory turnover
• Manage large numbers of styles and SKUs
  efficiently and accurately
• Improve management understanding of forecasting
  and inventory management process and performance
• Increase sales and profits

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Inventory Management Software
inFlow
Inventory software for small to mid-sized
businesses. divided up into four main modules

• Sales Sales Orders and Customer Information
• Purchasing Purchase Orders and Vendor
  Information
• Inventory Product Information, Stock
  Quantities, Stock Adjustments, etc.
• Reports Reports offered by inFlow to gather and
  share information

http//www.inflowinventory.com/
Download options Free Edition, Regular Edition
(299/license), Premium Edition (499/license)
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Inventory Management Software
Traker Systems

• Software development company providing Inventory
  Control Software for 3PL Public Warehouses,
  Manufacturers, and Distributors.
• Inventory Control TrackerTM
• Inventory records are updated automatically
• Notifications (reaching expiration date)
• Multiple warehouse tracking
• Track items by item , lot , production code,
  date, carrier, consignee.

http//www.trakersystems.com
Editions 3PL Public Warehousing Edition,
Manufacturing Distribution Edition, Lite Edition
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Inventory Management Software
FishBowl Inventory
Inventory Management system for small to
medium-sized companies that integrates with
Quickbooks.

• Features
• Multi-location inventory tracking
• Manufacturing
• Part Tracking
• Unit of measure
• Drop shipping
• Bar coding
• Credit card processing
• Variable pricing and discounting
• Order picking
• Kitting

www.fishbowlinventory.com
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Inventory Management Software

• AdvanceWare Technologies, AdvancePro Inventory
• http//www.advanceware.net
• NetSuite
• http//www.netsuite.com/portal/products/netsuite/s
  upply-inventory/main.shtml
• Direct Tech, Inc. Forecast21 (Inventory
  forecasting)
• http//www.direct-tech.com

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Inventory Optimization Software

• Mincom Critical Inventory Optimization (MCIO) is
  an intelligent, predictive software solution that
  identifies the optimal holdings of every stock
  item based on usage patterns and criticality.
  MCIO automatically analyzes and adjusts stock
  levels and reordering requirements on an ongoing
  basis.
• SmartOps Enterprise Inventory Optimization (EIO)
  is a comprehensive suite of software modules that
  enables organizations to plan and manage
  inventories across global supply chains. SmartOps
  EIO encapsulates sophisticated, proprietary
  algorithms into software that integrates with
  enterprise planning systems and handles
  large-scale, complex supply chains in a dynamic
  and automated manner.

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Inventory Optimization Software

• JDAs Network Inventory Optimization uses
  deterministic and stochastic optimization
  combined with flexible user-interface and
  analytical workbenches
• Smartcorp uses proven forecasting solutions that
  accurately predict, for each product item, the
  most likely or expected value for demand over a
  given lead time.  The safety stock
  recommendations and stocking level estimates that
  are generated are immediately available for use
  in other parts of your corporate planning system

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Vendor-Managed Inventory
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Challenge

• Due to increased global complexity, companies are
  experiencing long lead times and high demand
  volatility. This has resulted in an increased
  emphasis on managing inventory. Identifying the
  best practices and the best tools to accomplish
  this has become critical

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Vendor Managed Inventory
VMI is the process where the supplier generates
orders based on mutually agreed objectives and
demand information sent by the customer.
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Main Activities

• Supplier/Vendor has access to customers
  inventory data
• Supplier/Vendor is responsible for maintaining
  the inventory level required by the customer
• Supplier/Vendor replenishes inventory via
  scheduled reviews

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Benefits

• Customer
• Automate Replenishment process
• Reduced inventory
• Reduced operating costs
• Focus on core process
• Intangibles
• Shorter cycle time
• Greater customer satisfaction
• Avoid stock-outs

• Supplier
• Increased volume
• Forces disciplines
• Measurements
• Communication
• Better planning and resource use
• Visibility via information sharing
• Need to eliminate or reduce non-value-added
  activities
• Reduce safety-stock

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How to make it work

• Clarify expectations
• How the system will benefit both organizations in
  the long term
• Agree on how to share information
• Enough information to maintain a steady flow of
  goods is necessary
• Keep communication channels open
• Misunderstandings need to be studied as
  opportunities for learning and then used to avoid
  repetitive problems in the future

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VMI Flow
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Performance Measurements

• How to ensure VMI will enhance the business?
• Establish measures identify the goal
• Starting number of items vs. expected goal
• Inventory initially vs. expected goal
• Total inventory at start, during, and after

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Measurements

• Operational improvements
• Internal
• The number of stock outs and duration
• Cost of material/service before and after
• External
• Customer satisfaction
• Improvement of delivery availability
• Other points as defined by the parties
• Competitive advantage considerations

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Just-In-Time (JIT)
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JUST-IN-TIME (JIT)

• JIT is originated in Japan as part of the Toyota
  Production System in the approach to a Lean
  Production System.
• JIT is a strategy that strives to improve a
  businesss return on investment by reducing
  in-process inventory and associated carrying
  cost.

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JUST-IN-TIME

• JIT means making only what is needed, when it is
  needed, and in the amount needed.
• JIT supplies what is needed, when it is needed,
  and in the amount needed according to the
  production plan to eliminate waste,
  inconsistencies, and unreasonable requirements,
  resulting in improved productivity
• JIT removes inventory to expose production flaws
  that can be corrected or removed in order to
  improve production quality and increase
  efficiency and effectiveness .

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PROGRESSION TO JIT
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JUST-IN-TIME EFFECTS

• Increase factory response time.
• Improve customer satisfaction.
• Build of make-to-order models to eliminate the
  risk of no being sold.
• Standardization of parts assemblers increasing
  product quality.
• Reduce setup time allowing the company to reduce
  or eliminate inventory for change-over time.
• The flow of goods from warehouse to shelves
  improves by reducing lot sizes to simplify
  inventory flow and inventory management.

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JUST-IN-TIME BENEFITS

• Employees with multiple skills are used more
  efficiently by having the flexibility to move
  employees where they are needed.
• Production schedule and work hour consistency is
  synchronized with demand by avoiding paying
  overtime or focus resources to other areas.
• Increase emphasis on supplier relationship.
• Supplies comes in at regular intervals through
  the production day by synchronizing the supply
  with the demand.

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JUST-IN-TIME LIMITATIONS

• Preconditions to JIT
• Trust must be present between labor/management as
  well as suppliers/consumers
• Recognition of processes
• Familiarity with problem solving
• Quality at the source
• Agreement over value and waste
• Right Settings
• Applicable in growth to maturity phases of
  Product Life Cycle
• Standard Product
• Standard/Fixed Pay-Rate
• Problems with Piece-Rate Scheme
• JIT operations may leave suppliers and consumers
  open to supply shocks and large supply or demand
  changes.

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JIT Case Study
Stopping Stock Outs with Anixters Just-in-Time
Supply
Source http//www.anixter.com
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Case study Anixter

• Anixter is a leading global supplier of
  communications and security products, electrical
  and electronic wire and cable, fasteners and
  other small components.
• They provide innovative supply chain management
  services to reduce customers' total cost of
  production and implementation
• For more than five years, Anixter has developed a
  relationship with a major manufacturer of medical
  equipment.
• Anixter supplies this manufacturer with a variety
  of fasteners directly delivered to its production
  facility. The fasteners are used to build medical
  equipment from lighting and cabinets t electro
  cardiogram testers and examination tables

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Case study Anixter

• Before Anixter started working with the company,
  a normal turnaround on the delivery of parts
  would take a week.
• This slow turnaround increasingly led to delivery
  delays and out-of-stock situations to cover for
  the delays and stock-outs. On-site inventory
  levels were also increased to cover potential
  shortages.

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Case study Anixter

• Challenge
• Minimize turnaround on delivered parts.
• Solution
• Anixter applied Just-In-Time supply chain with
  the objective of keeping the required amount of
  products on the manufacturing floor.

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Case study Anixter

• Two manufacturing facilities located in close to
  each other.
• More than 2,000 bins placed in seven
• stocking locations spread across the two
  facilities.
• The company placed between 300 to 800 line orders
  a week. Providing between 900 and 1,000 part
  numbers.
• Each of the stocking locations needed to meet a
  specified min/max range to meet production goals
  without overstocking material.

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Case study Anixter

• Anixter implemented a Just-in-Time program that
  shifted the inventory to Anixters distribution
  center to allow for a controlled and planned
  release of material to the production facilities.
• Anixter established a schedule that allowed the
  Anixter employee to scan the bin levels on a
  weekly basis.
• During the course of the first year, Anixter
  worked with the customer to create usage
  forecasts.

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Solution

• Anixter generated weekly usage reports, which
  created minimum and maximum quantity ranges on
  the used products without risking stock-outs or
  over-delivery.
• Based on two- to eight-week requirements,
  Anixter successfully worked with the customer to
  reduce the amount of on-hand materials and create
  an efficient just-in-time solution that kept the
  required amount of products on the manufacturing
  floor.

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Program Results

• Forecasting allowed the manufacturer to gain
  greater control over its inventory and set
  expectations of the levels of materials that
  would be kept on the production line and in its
  storerooms.
• Instead of everything going through separate
  steps from a buy to expediter to receiver to
  quality control to builder, everything is handled
  by Anixter.
• The manufacturer only had to focus on the
  building of its products.
• The company has set a goal of doubling its
  profits in five years.
• Reducing its supplier base by half.
• Because of Anixters just-in-time program, the
  supply chain has built-in flexibility to meet
  shifting demands.

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Benefits Obtained

• Reduced capital investment in components and
  associated costs
• Increased facility space
• Increased efficiency
• Improved single point of control for all material
  receipt
• Eliminated production line shortages and delays

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• Questions ?