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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 – PowerPoint PPT presentation

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Title: INVETORY MANAGEMENT


1
INVETORY MANAGEMENT
  • Presented By
  • Leydi Velez
  • Ahmed Al Shaeef
  • Herbert Guerrero
  • John Herrera

EIN 5346 Logistics Engineering Chapter 9
2
Agenda
  • Contemporary Approaches to Managing Inventory
  • Inventory Management Software
  • Vendor-Managed Inventory (VMI)
  • Just-in-Time (JIT)
  • JIT Case Study

3
  • Inventory Management Software

4
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.

5
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

6
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)
7
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
8
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
9
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

10
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.

11
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

12
Vendor-Managed Inventory
13
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

14
Vendor Managed Inventory
VMI is the process where the supplier generates
orders based on mutually agreed objectives and
demand information sent by the customer.
15
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

16
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

17
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

18
VMI Flow
19
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

20
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

21
Just-In-Time (JIT)
22
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.

23
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 .

24
PROGRESSION TO JIT
25
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.

26
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.

27
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.

28
JIT Case Study
Stopping Stock Outs with Anixters Just-in-Time
Supply
Source http//www.anixter.com
29
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

30
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.

31
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.

32
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.

33
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.

34
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.

35
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.

36
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

37
  • Questions ?
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