Inventory Management

Data Drives Inventory Management Systems

Data must be accurate, complete, and easily accessible for facility managers to be able to determine which items to stock and what is already on hand.

By James Piper, P.E.  
OTHER PARTS OF THIS ARTICLEPt. 1: Understanding the Benefits of Inventory Management Pt. 2: This PagePt. 3: Overcoming Obstacles To Effective Inventory Management

Inventory management systems are data driven. If they are to be successful, the data must be accurate and complete. Standards will have to be adopted as to how items are identified and where they are to be located. For each item, an inventory number must be assigned along with a basic description of the item.

Determine items to stock

Facility managers must first determine what items they are going to stock. While it would be nice to be able to stock everything that the facility needs, no warehouse would have sufficient space nor would maintenance budgets be able to fund the start-up and stocking costs. Priorities will have to be set based on past requirements, what the impact would be if there were a delay in obtaining a particular component, and funding. Remember the old 80/20 rule: 80 percent of the demand on the inventory system will be for 20 percent of the items stocked. Not all stocking decisions should be driven by the 80/20 rule, of course, since there are critical system components that should be kept on hand regardless of their frequency of use. If historical records are available, they will help to identify which items should be stocked.

Find out what you have

Next, it will be necessary to perform a complete physical inventory of the stock on hand. This gives the system an accurate starting point. For each item, a minimum reorder point must be established. If the item is used on a seasonal basis, that too must be identified so that a minimum count is set just prior to the start of the active season.

Setting the correct level of inventory will require going through historical records from past purchases for those items, combined with the judgment of facility managers. For example, suppose purchasing records show that a particular item was required five times during the past year. If they were used in a short period of time, that would indicate that the minimum inventory level should be something slightly greater than five. But the facility manager might know that the systems where that component is most frequently used are either increasing or decreasing demand for the part, meaning that the minimum inventory level would have to be adjusted accordingly.

Remember, the goal of the system is to provide maintenance personnel with the components they need, when they need them, while offering all who use the system the information concerning what is in stock, what is being used, and how the system is meeting the needs of both maintenance personnel and facility managers.

Continue Reading: Inventory Management

Understanding the Benefits of Inventory Management

Data Drives Inventory Management Systems

Overcoming Obstacles To Effective Inventory Management

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  posted on 3/21/2018   Article Use Policy

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