I’ve faced many supply chain challenges in my career, but the one that really doesn’t get talked about enough is poor inventory control. This should be an obvious part of supply chain management, but the fact is, when products aren’t sold and can’t be sent back to the manufacturer, too many companies have absolutely no idea what to do with them. ......Read More

One of the most common issues supply chain management professionals struggle with is accurately identifying the causes of inventory discrepancies. If a discrepancy is discovered when users pick an item or perform a count, an inventory correction typically is made.......Read More

The best supply chain managers are also effective negotiators. Sure, negotiation skills are essential to purchasing — but they also play an important role in inventory management and transportation and logistics. Interestingly, some of the most essential negotiation skills also happen to be displayed each week on those reality TV shows about world-famous pawn shops. If you’re unfamiliar, basically, the programs depict a pawn shop staff’s interactions with customers, who bring in a variety of artifacts. Viewers watch as the players haggle over price and debate each piece’s historical background.......Read More

Inventory stratification is the process of classifying items based on predetermined factors related to a company’s business environment and goals. The methodology organizes inventory items and stock keeping units (SKUs) into categories in order to optimize working capital. Being revenue-driven, inventory stratification ranks items on their profitability and how quickly they sell. Fast-moving items, even if they don’t earn much profit, are positioned ahead of items that are highly profitable, yet sell at a slower pace. Those SKUs that are less lucrative and do not sell in a reasonable amount of time are removed from the inventory mix. The key to inventory stratification, therefore, is attaining an optimal balance of carrying just enough slow- and low-selling inventory to meet customer demand without burdening cash flow.......Read More

Original equipment manufacturers (OEMs) know all too well that any failure to support their customers during crucial periods of equipment breakdown can seriously damage reputation and destroy any potential for future sales. OEMs that sell industrial equipment to corporate customers appreciate this troublesome fact better than most. These businesses often face what is known as the long-tail effect, which describes having a large proportion of spare parts that are sold infrequently. Keeping this long tail under control is key to effective management in the spares distribution environment.......Read More

While operations management professionals can appreciate the tangible inventory issues associated with stockouts, many have considerable trouble understanding the related costs. APICS magazine Managing Editor Elizabeth Rennie recently spoke with John Van Vliet, Ph.D., an associate professor in the School of Business Management at Shorter College in Rome, Georgia.......Read More

Mallinckrodt Pharmaceuticals is a global specialty pharmaceutical company dedicated to managing complexity and improving lives. The company operates in two segments — specialty generics and specialty brands — offering a comprehensive portfolio of specialty generic controlled substances for pain management, substance abuse and attention deficit hyperactivity disorders, as well as a broad line of active pharmaceutical ingredients.......Read More

The health care landscape is rapidly evolving, and more pressure is placed on hospitals and health systems to reduce costs, improve outcomes and increase patient satisfaction. The following real-world account demonstrates the benefits that can be realized when partners work together.......Read More

Several years ago, I visited a manufacturing company that was just putting the finishing touches on an impressive, highly automated warehouse. Meanwhile, another area of the company was involved in a lean manufacturing initiative that promised to greatly reduce the amount of inventory that the company would have on hand at any given time. Of course, after successful completion of the lean project, it was quite likely that this expensive, new warehouse would not really be needed. ......Read More

I once had a long-term consulting assignment with a manufacturer of large-vehicle chassis. The chassis were sold to motor-home manufacturers that would add the bodies and interior accessories. Each chassis consisted of the frame, engine, axle, transmission, brakes, electricals and anything else necessary for safe and legal driving.......Read More

To many companies, inventory reduction is always a desirable objective. Inventory ties up cash, takes up space, tends to deteriorate and sometimes becomes worthless. It must be stored, protected, managed and counted. And there’s always too much of it — or so it would seem.......Read More

Throughout the years, I have seen countless companies doing what they call “cycle counting,” which, in reality, is no such thing. These situations often result from managers who are unwilling to invest in a true cycle counting program. They seem to understand the cost of cycle counting but fail to appreciate the value of accurate inventory records. The subsequent poseur systems these managers create are so concerned with limiting costs that, when errors are ultimately uncovered, no money is allocated to address the root causes.......Read More

Years of consulting have taught me that the most perilous time for a small company is when it has grown to a point where it can no longer be managed informally. The founder of the business realizes that it is impossible to keep up with everything without some kind of help but has qualms about suddenly having to share decision-making responsibility.......Read More

SKUs seem to drench today’s supply chains with numerical complexity. In anecdotal research about SKU growth, one professional told me, “Almost half of our current SKUs did not exist 36 months ago.” This situation points to a few possible scenarios.......Read More

Sometimes very successful managers grow to believe that they are invincible. Such was the case with the new general manager of food producer ABC Company. At ABC Company, products had to stay frozen until people were ready to consume them. But the business had a small freezer that could only hold a few hours' worth of production. The good news was that the firm enjoyed a long-standing relationship with XYZ Company, which would haul away food production every few hours and distribute it via a network of refrigerated trucks and warehouses. For many years, this resulted in mutual profitably.......Read More

Replenishment managers are responsible for ensuring that items are replaced the moment they leave shelves—whether they have been purchased by an end customer or removed by a retail professional because of damage or age. At the heart of this effort is inventory management, as replenishment managers walk that very thin and precarious line between stockout and oversupply.......Read More

The steel industry encompasses both the producers that melt and form steel and the processors that add value by conditioning steel for downstream customers. As a result, trends and shifts in the steel industry significantly influence material costs for automotive, construction, consumer appliance, energy, heavy machinery, and many other sectors.......Read More

Lean purists insist that it’s possible to manage any kind of inventory with some form of a pull system, which uses consumption-based triggers for replenishment. Alternatively, the material requirements planning and sales and operations planning folks typically prefer the zero-inventory benefits offered by a more traditional method involving replenishment that is triggered by planned orders only. As is so often the case, the truth lies somewhere in between: Certain operations do lend themselves to pull, while others are better managed with a push approach. ......Read More

The most effective cycle counting programs reflect the realities of managing inventory in a dynamic environment. Within successful frameworks such as these, inventory managers are able to reach their inventory accuracy goals and balance the cost of cycle counting with the cost of analyzing variance causes and maintaining accuracy controls. Unfortunately, many programs suffer from ambiguity and imprecision related to the mechanics of assembling the cycle counting system. Furthermore, too many inventory managers struggle to determine the optimum cycle for item review, how many items to count, and how to use cycle counting results to continuously improve record accuracy.......Read More

Inventory turnover is a powerful marker. It communicates a company’s inventory management values, compares one business’s inventory velocity to that of similar firms, measures internal trends, and sets the desired standard for group and individual goal attainment.......Read More