In a previous post we demonstrated that the classic ‘saw tooth’ diagram associated with inventory management and control is sometimes not at all representative of reality for engineering materials and spare parts. In this post, I am going to expand on this to show just how much it can cost your company if you fall […]
The Truth About Inventory Management Theory
Subject Area: Spare Parts Inventory Management Theory The Real Spare Parts Inventory Management Situation The problem is, of course, that reality almost never looks like the theoretical model. The truth is that for engineering and spare parts, the chart in Figure 2 is far more likely to be representative. This graph has four characteristics that […]
The Spare Parts Storeroom – More Than Just Transactions
Many people view the spare parts storeroom as being a purely transactional environment. That the function of the storeroom is to administer the transactions associated with receiving and issuing materials and spare parts. But if we really want the spare parts to be maintained so that they will perform as we expect, when they are […]
The Stock Out Metric
The stock out metric is one of the most popular ways to monitor spare parts inventory. A ‘stock out’ occurs when there is demand for an inventory item but there is no stock available. The Stock Out metric is a curious measure and as with all metrics one needs to be careful about what it […]
Managing Slow Moving Inventory
Is Slow Moving Inventory Really An Easy Target for Inventory Reduction? Inventory that is slow moving is often seen as an easy target for people undertaking an inventory review. Rather than undertake a structured review process (such as the Inventory Cash Release Process) many people will target slow moving inventory as if it is some […]
Inventory Management Formula – Knowing is the Easy Part!
In Fact, Just Knowing Inventory Management Formulas is Not Enough Does it really matter if you do or do not understand all the inventory management formula? Does it matter if you know or don’t know how to calculate the Reorder Point or the Reorder Quantity for individual SKUs? Yes, it does. How many people […]
The Right Spare Parts Metric – Accuracy Vs Precision
Performance measurement with the right metric is the cornerstone of all improvements efforts. If you don’t or can’t measure where you are now versus where you were before, then how do you know if you have improved? Just as importantly, however, is knowing if your measure actually reflects your current position or the issue that […]
What is Your Sphere of Influence?
Have you ever attended a sporting event or theatrical performance? Most of us have. At some time have you been sitting there when someone else starts applauding or gets up to give a standing ovation? Ever noticed what happens when people do this? The people around them start to join in. Often reluctantly at first, […]
Spare Parts Inventory Management – It’s All About Process!
Spare parts inventory management has a lot in common with sports. For example, in professional sport these days it is not unusual to hear players and coaches talking about process. They talk about focusing on the process and following the process. Rarely do they talk about scoring a goal, a touchdown, a home run, a […]
Inventory Myth #5: Putting Items Into Spare Parts Inventory Saves Money
Adding an item to spare parts inventory is sometimes seen as way of spreading the cost of the item so that the original purchaser can get a lower charge to their budget. This is particularly the case with project and engineering items that have a minimum order quantity. This is similar to Myth#1: Economic Quantities […]