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setting method in the management of stocks

In previous post we outlined what results can be obtained from optimized inventory management, considering that they are both a cost an opportunity for the company.
In this post we look at in more detail the method to be set to do just that improvement in their management.

As is known, the main purpose of a good system of inventory management are two
- ensuring the user the existence of stock ( availability) of the necessary materials to industrial activity at the time they need;
- to minimize the volume of goods lying ( fixed assets), operating costs (inventory costs ) is to give orders to suppliers (supply costs).

These contemporary purpose in itself contradictory, can be reconciled through the combined use of specific methodologies and appropriate tools, which allow turn to act on two fronts:
- procurement plan sizing the material requirements based on statistical analysis, historical and forecast, and make the re-orders at scheduled intervals;
- manage inventory flow in logical, taking under continuous control the specific management indicators (turnover rate, minimum stock levels, supplier lead time, etc.).

The choice of the logic requirements planning depends on local factors, different type of business and process transformation, migrating from the classic model MRP (Material Requirement Planning, which puts him in line "appointments", working backward from the final date of availability and have come to define the individual initial dates of issue of supply orders) to more advanced concept of transit-flow ', resulting from the application of JIT.

Common sense teaches, however, that the first thing to do is distribution of materials for phase-cycle (raw materials, semi-finished components) and use category (consumption, import orders, spare parts, substandard items and waste, aids, etc.)..

must then determine the correct size for a single code and the values \u200b\u200bof the parameters (annual consumption, storage media, classification ABC Lead Time of supply, packaging unit, lot of supply or production level of safety stock, reorder point, etc.), according to the algorithms for calculating and accounting standard proposed by any dedicated data processing system.

should then do the balance of convenience cost opportunities.

We know that risk is inherent in every choice, including whether or not to maintain levels of precautionary basis. It is important to weigh the pros and cons of a possible decision in this regard, including through a simple estimate of the economic implications in the face of technical actions. We need to find a balance, which located at the minimum value of the sum of costs to be borne according to the level of service guarantee that requires the presence of stockpiles.

A clear example of the above can be formed by the method known as ABC matrix cross-turnover stocks , applicable to any type of Creative Commons and aims to derive a set of useful information to both calibrate the inventory management policies for reduce the value of montescorte.

In practice, classifying the revenues in accordance with the policy of the ABC-known law of Pareto, three categories of products are obtained approximately as follows:

- Class A: 20% of code accounts for 80% of the value of turnover

- class B: 30% of the number constitutes 15% of value;

- class C: the remaining 50% of the remainder is 5 % of value.

Applying the same calculation process to montescorte (value of the average stock by code) can be obtained similar to the previous three categories (A = 20% the number of codes corresponding to 80% of the value of montescorte). At this point, "crossing" the two classifications is obtained the membership of each individual code to one of nine possible combinations of class-turnover stocks, AA (Class A sales, class A stocks) to AB, AC, BA, etc.. up to DC.

It can be shown that each of the resulting membership shows very specific situations and propose solutions such as:
- Classes AA and BA close to optimal management methodology Just in Time ;
- Class AB, BB, BC: Recommended the management reorder point ;
- Class AC: recommended the elimination of the product (alternative management contract);
- classes CA and CB: requires the ongoing monitoring and systematic characteristic parameters;
- Class CC: no problem management.

should not be forgotten that the matrix is dynamic, that is variable over time. It is therefore advisable to use it periodically to check the changes of content for the class. And it is the study of these internal migrations that develop the most effective actions to improve management and stock reduction.

These considerations, always properly interpreted, always provide a hint of how to set the inventory management in real cases.

Good logistics!