Inventory Optimization with Andrew Jordan
Inventory management program is intrinsic in every organization. Although the structure varies from one organization to another, however, it typically includes setting the limits for every asset, capital investment and stock, as well as setting the lead time for stock purchases. Some organizations focus on optimizing their inventory based on reducing the capital investment. Others take availability of the assets into consideration. If you think about it, the latter strategy is much more effective if implemented successfully. It not only ensures the availability of assets when needed but also reduces unnecessary maintenance cost. Thus, resulting in capital optimization along with increased ROI.
In this episode, we covered:
- What inventory optimization exactly is
- Are there different types of optimizations
- Why organizations should be concerned about inventory optimization
- Benefits of inventory optimization to organizations
- Steps to performing an inventory optimization activity
- Traditional vs. advanced methods to inventory optimization calculation
- Pre-requisites to inventory optimizations
- Considerations to selecting agencies that offer advanced inventory optimizations
- And much more!
It is not uncommon for some organizations to waste a huge part of their capital in either overstocking or stocking the unnecessary parts. They need to keep their supply and demand in check. If they don’t have access (or have limited access) to inventory and don’t plan the stocking strategy, this results in the unavailability of the right spares when needed. On the other hand, if they are aware of the current stock and purchase the right parts at the right time, the availability and level of service will surely improve.
They should know which parts are being overworked so that they can stock the duplicate parts. In case a part fails or wears out, the duplicate part will be readily available. They should be regularly monitoring as to why a part is being stocked, why they’re using it, and how frequently. The answers can only be obtained if they have a comprehensive data model around their inventory optimization program. It is often a good practice to bring in external consultants who can help in interpreting the data correctly.
The usual order of activities goes into simple steps that lead to improving their PM program performance. First, the data is put in the right order that comes from suppliers and customers. After which, it is run through different algorithms in place. Next, it is put into the inventory optimization software to check for variations. Once the results are obtained, recommendations are written out about what steps or measures can be taken to improve the performance of the maintenance programs and optimize the inventory management. Normally, the service providers tend to stay in touch with the client organizations as the realities change and situations arise. The organizations can start by just understanding the variables that are affecting their stocking strategy.
It depends on the level the organizations are at into the inventory optimization process. They need to prioritize their assets depending upon their usage and then understand the root causes of unsuccessful inventory management. Then they can consult with agencies they trust and build a productive business relationship to help them along the way. They need to consider the objectives that they have in mind. They should be adaptable to the recommendations from their consultants and keep prioritizing based on the conditions they face with time.
Eruditio Links:
- Eruditio
- HP Reliability
- A Smarter Way of Preventative Maintenance Free eBook
- inspired Blended Learning (iBL®)
- James Kovacevic’s LinkedIn
Andrew Jordan Links:
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