Wednesday, August 6, 2008

Control your inventory

Inventory drivers are things that tend to make inventory go up or down. Understanding them is the beginning of gaining control over your inventory.
The more items you have, the more inventory you will need.
The more SKU's in a product, the harder it is to bring matched sets of parts together at the same time. Because there are multiple items, with multiple vendors, kept and routed through multiple places or paths, with more opportunity for delays, defects, etc, more inventory will be needed.
The more operations there are and the longer that they take, the more inventory you will tend to have. More operations mean a longer supply chain. It may also mean differing lot sizes per operation and more places for delays and defects to occur. Process simplification helps reduce inventory.
The more facilities that inventory passes in and out of, the further apart those are and the harder they are to reach and pass material in and out of, the more inventory you will tend to have.
The more times inventory passes from the control of one system or organization to another and the less efficient the transfer is, the more inventory you will tend to have.

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