Client Requirements
Our client has requested that we find ways to reduce the inventory level in the warehouse, taking into account the type of items and future forecast. Furthermore, they wanted to reduce the overall cost of operations while still creating standards for each item to ensure the optimal inventory level. To achieve this, we needed to analyze the current inventory levels, determine the amount of inventory that is necessary for each item, and create an inventory management solution that will provide the right amount of stock for each item. We also needed to identify ways to reduce the cost of operations, such as by reducing distribution costs, negotiating better supplier terms, or using more efficient inventory tracking methods.
Our Methodology
In order to achieve our client’s goals, we first classified the list of products into 3 distinct classes utilizing ABC analysis. We then further analyzed the current stock level utilizing Pareto and Inventory Management Tools in order to gain valuable insights and clarity. After this, we selected the products that should be monitored and tracked. Finally, we defined a set of rules and criteria that had to be met in order to effectively manage the stock and meet the desired objectives. This included setting target levels, reordering points and safety stock. We then developed and implemented a system to monitor and track stock levels on a regular basis to ensure the overall objectives were met.
The Outcomes
The ABC analysis with a Pareto Chart was used to classify items into categories for inventory management and helped to drive business decisions. The stock balance index was used to assess the amount of stock available at any given time. An action plan was also created for the different classes of products, which outlined their inventory requirements and provided a strategy to achieve desired goals. In addition, a reorder point, safety stock, and lead time was identified to ensure an appropriate quantity of product is available when needed. The estimated savings analysis was also obtained and helped to identify areas where savings could be made in the inventory process.
