Taking a Closer Look at Stocking Strategies
OTHER PARTS OF THIS ARTICLEPt. 1: How to Respond to Inventory Management ChallengesPt. 2: Seeking Solutions for Inventory ConcernsPt. 3: This Page
Now that obsolete materials have been removed and stock levels established, managers can take a closer look at stocking strategies, including vending machines, VMI, consignment, and open stock or free issue. These strategies can help control inventory and manage cash flow.
In some incidences, vending machines stocked with the proper items actually can reduce inventory by 30 percent or more. The benefits are numerous and include reduced travel time, direct stocking by the supplier, and less ordering. As mentioned earlier, 12 percent of stocked items account for 78 percent of the activity in a typical storeroom.
Commonly, this group of items includes gloves, adhesives, batteries, lubricants, cleaning supplies, and personal protective equipment, and all are candidates for distribution via vending machines. Motors, pumps, filters, and similar equipment are prime candidates for VMI or consignment. We started a program with a local auto parts supplier to kit and deliver all parts associated with mobile equipment PMs. This step alone reduced inventory by more than $140,000. A similar program was implemented for fork trucks and other heavy equipment.
Open stock items are high-volume, low-cost parts, such as nuts, bolts, washers, and fasteners. Managers can bring in one of several companies that manage these types of programs well, relieving storeroom personnel of the responsibility.
Managers have a host of options when evaluating storeroom inventory. I cringe when I hear that a manager’s goal is to reduce inventory by a certain percentage in the next year. A manager needs to clearly understand the contents of the inventory, the obsolete items, and the stocking levels before determining the tactical inventory value required to reduce risk. Once a manager has determined that value, the next step is strategically managing that value and inventory.
Andrew Gager, CMRP, CPIM — email@example.com — is director of Asia and Australia with Nexus Global Business Solutions. He has more than 28 years of manufacturing and facilities experience, ranging from warehousing operations to plant management. He is a registered CMRP, CPIM and Six Sigma Green Belt, and he is formally trained in change-management principles.