What would you say if I told you there is a single process that combines seven of the top ten inventory reduction practices, while providing individual analytical performance measurements, and can be used to set an objective Sarbanes-Oxley compliant obsolescence reserve? My guess is that you would think, like my mother-in-law believes already, that I am living in a dream world. But let me assure you I am not living in a dream world. I have implemented such a process and used it for more than ten years to achieve yearly inventory reduction goals while also increasing customer service levels.
This process was not dreamed up in an academic situation that is too complicated for non-PhD’s to understand. The process was created by 35 Materials Managers of top level organizations. These same managers then utilized this very efficient process to achieve inventory reductions on average by 25% while they also increased their customer service levels. The list of companies today that are using this inventory reduction process is impressive and include:
Goodyear, Motorola, Cummins, Carrier, Phizer, Tyco Electronics, and Hyundai just to name a few.
The name of this inventory management best practice is the Inventory Quality Ratio, IQR. It uses your ERP data, past usage data, inventory ABC codes, buyer/planner identification codes, inventory stock records, open purchase order records, with user defined time fences, desired inventory stock goals, slow moving inventory definition, and your no moving inventory definition to identify and prioritize actionable inventory reduction opportunities. At the same time it provides a dash board report for tracking individual and team performance based on your organization’s goals and inventory plan.
The process is very customizable to your organization’s philosophy and goals for inventory asset utilization. As a materials manager, I loved that the process utilized the demand plan, that my team was told to support, as input for our measurement, not an under achieved actual cost of goods sold amount.
For further information and/or help with implementation of this great inventory management process please contact me at –
[email protected]
630-538-9042
www.GregoryTaylorConsulting.com