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Inventory Process Optimization™ |
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What's Wrong with Inventory Optimization?
Increasing inventory, low stock turns and high levels of stock outs are just some of the issues that companies face with their MRO, materials, and engineering spares inventory.
These issues are actually symptoms of the way the inventory is controlled, supplied, accessed, purchased and managed. This means that achieving true inventory optimization and lasting results requires an understanding of the behaviours, context and process factors that influence the inventory outcomes.
Traditional inventory review and 'optimization' techniques do not address these issues, they rarely include the range of personnel that influence the outcomes, and do not improve the company knowledge to address these issues in the future.
Why Is Inventory Process Optimization® Better
Achieving true inventory optimization requires a new, innovative approach that combines knowledge of inventory management, parts usage, procurement and supply chain issues with a review of the behaviours and management processes that drive them.
We call this Inventory Process Optimization®.
Inventory Process Optimisation® is not software based but rather applies supply chain, behavioral and process review principles to what is commonly thought of in either mathematical or technical terms. This different emphasis achieves significant results as it identifies opportunities that ‘traditional optimization’ does not and, in fact, cannot achieve. In addition, our records show that these results have been maintained for many years, they are not short term ‘slash and burn’ outcomes.
At Initiate Action we help companies achieve Inventory Process Optimization® using a two stream process that is specifically designed for MRO, materials, and engineering spares inventory and involves training a wide team of influencers.
Read the Inventory Process Optimization White Paper Figure 1: Simplified Version of the ICR® Process
Stream 1: Individual Parts Review
The Individual Parts Review utilizes our Inventory Cash Release® (ICR®) Process and comprises three key elements.
In addition, unlike the algorithms hidden within software, our approach is fully transparent and is documented in the book Smart Inventory Solutions, written by our Principal Phillip Slater and published by Industrial Press, New York, NY.
It is because the logic of software algorithms is not visible that most users don’t trust the outcomes and ultimately override the recommendations. With our approach this does not happen. Figure 1 shows a simplification of the ICR® process.
Download a comparison of approaches.
Download a copy of our simple, step-by-step methodology
Stream 2: Management Process Review
Having established what changes are required for individual parts it is then important to review, understand and address the management processes that will have an ongoing impact on your materials and spares inventory management results.
This is achieved in Stream 2: the Management Process Review.
The steps are:
The output of the Management Process Review is an agreed action plan and timetable to address issues and behaviors.
Implementation can then be undertaken independently or with our assistance.
The application of the two streams is shown in Figure 2.
Figure 2: Application of the Two Streams
Follow these links for more information |
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Phillip Slater's latest book on improving operational performance.
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A New Strategy For Continuous Improvement
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'The Five Myths of Inventory Reduction' |
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Initiate Action Pty Ltd USA and Canada Free Call 800-581-7678 49 Vida Street, Aberfeldie Vic 3040 Australia phone: +61 3 9331 3181 fax: +61 3 9331 3180 |
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