METHODS FOR IMPROVED INVENTORY MANAGEMENT
Policy Definition and Refinement:
Inventory management incorporates a number of policies and procedures that guide inventory-related decision. These involve performance measures and training. The role of each is discussed.
Performance Measures:
Clear and consistent performance measures for inventory planners are key ingredients in the inventory management process. These measures must reflect the trade-off between service and inventory level.
Training:
Inventory management is a very complex discipline because of the number of factors involved in the process as well as its impact on other enterprise functions such as production and procurement. It is also important to understand the nature and dynamics of the interfaces between enterprise inventory management and other entities within the value chain. In response to these factors, many firms are increasing both the amount and the sophistication of training to improve inventory management decision making.
Two types of training are appropriate. First, planners should understand how inventory parameters such as service objectives, review periods, order quantity, safety stock, and inventory management logic influence inventory operations and performance. For example, the planner should understand how review periods, order quantities, and safety stock can be traded off to meet service objectives.
Second, planners should understand how their inventory management decisions affect other members of the value chain.
Information Integration:
Inventory effectiveness and performance can be such stantially increased and uncertainty decreased by integrating requirements information (forecasts, orders, marketing plans, inventory status and shipment status) across the enterprise and among channel partners. For example, common forecasts and a consistent measures of inventory availability reduce the uncertainty between enterprises systems and result in less need for buffer inventory.
The sidebar on Dow Chemical and Eastman Kodak illustrates how improved information integration both within the enterprises and across the supply chain results in greater inventory effectiveness.
Expert Systems Application:
Expert systems represent another initiative that firms utilize to enhance inventory performance. These systems use a computerized knowledge base to share inventory management expertise across the enterprise. This shared expertise can supplement the training and awareness discussed above. Expert systems may provide insight into the review period, inventory management logic, and strategies to employ with each product/market group. Results indicate that expert systems can provide substantial improvements in productivity and inventory performance.
Policy Definition and Refinement:
Inventory management incorporates a number of policies and procedures that guide inventory-related decision. These involve performance measures and training. The role of each is discussed.
Performance Measures:
Clear and consistent performance measures for inventory planners are key ingredients in the inventory management process. These measures must reflect the trade-off between service and inventory level.
Training:
Inventory management is a very complex discipline because of the number of factors involved in the process as well as its impact on other enterprise functions such as production and procurement. It is also important to understand the nature and dynamics of the interfaces between enterprise inventory management and other entities within the value chain. In response to these factors, many firms are increasing both the amount and the sophistication of training to improve inventory management decision making.
Two types of training are appropriate. First, planners should understand how inventory parameters such as service objectives, review periods, order quantity, safety stock, and inventory management logic influence inventory operations and performance. For example, the planner should understand how review periods, order quantities, and safety stock can be traded off to meet service objectives.
Second, planners should understand how their inventory management decisions affect other members of the value chain.
Information Integration:
Inventory effectiveness and performance can be such stantially increased and uncertainty decreased by integrating requirements information (forecasts, orders, marketing plans, inventory status and shipment status) across the enterprise and among channel partners. For example, common forecasts and a consistent measures of inventory availability reduce the uncertainty between enterprises systems and result in less need for buffer inventory.
The sidebar on Dow Chemical and Eastman Kodak illustrates how improved information integration both within the enterprises and across the supply chain results in greater inventory effectiveness.
Expert Systems Application:
Expert systems represent another initiative that firms utilize to enhance inventory performance. These systems use a computerized knowledge base to share inventory management expertise across the enterprise. This shared expertise can supplement the training and awareness discussed above. Expert systems may provide insight into the review period, inventory management logic, and strategies to employ with each product/market group. Results indicate that expert systems can provide substantial improvements in productivity and inventory performance.