Subject Area: Inventory Optimization Decision Support
Put another way, it is the balance between the cost of spending money to hold a spare part in inventory and the cost of additional down time incurred if the part is not available.
That is easy to say but hard to achieve!
The problem is that there are a number of change-related factors that can lead to holding an inappropriate level of inventory:
- The initial quantity decision was based on a ‘best guess’
- Supply chain changes – especially since the pandemic!
- Changes in market needs and equipment usage
Each of these issues can result in your company holding more (or less) inventory of a part than is appropriate.
This either wastes money (through over investment) or increases risk (through under investment).
The training we provide at SparePartsKnowHow.com will help you understand these issues (and the other system and structural issues you face) what is often need, in addition, is inventory optimization and decision support software.
There is, however, one more problem that most people don’t recognize.
Most of the so-called optimization software uses an algorithm approach that is based on retail and wholesale inventory management.
What the vendors of this software don’t understand is that this doesn’t work with spare parts inventory.
That’s why our solution doesn’t use an algorithm, it uses a Monte Carlo simulation. (I am not going to explain the detail of that here but am happy to talk about it.)
This approach takes the guesswork out of determining the minimal amount of inventory required to achieve defined service levels; thus, eliminating inventory imbalances and quantifying risk.
And isn’t that what you really want?
Most people have faced the nightmare of implementing software. Don’t get me started on this with large ERP solutions!
Our software isn’t like that.
- It is cloud based – no fussy installation.
- Simple to learn – after some basic training.
- Quick to provide results – seconds not minutes or hours.
- Easy to use – ideal as a decision support tool.
- Scalable – start with one location and scale up as needed.
- Low cost – you will be surprised at how it compares.
You don’t even need to include all your spare parts. I mean, why pay for analyzing items of very low value?
Just include the important and/or expensive items.
Our solution is very flexible yet fully functional – incorporating all of the required supply chain factors to accurately determine optimal inventory levels.
You know what happens when you don’t have the right tools – excess inventory and higher risk.
With the right inventory optimization and decision support tools you can address this and ‘right size’ your inventory.
Contact us to discuss your plans for implementing an inventory optimization decision support tool.