Identifying unnecessary inventory

Once we have used the inventory simulation to determine how high our inventories are actually allowed to be, we compare them to the inventories actually extant in our enterprise. 

The surprise will great Experience shows that we come up with more than twice as much inventory as we should actually have given the definition of service categories and lot size parameters (Fig. 49). 

This shows us the incredible potential available in our enterprise for lowering inventory. You are familiar with the symptoms  

If we take a look at the unnecessary inventories, we see that the incorrect estimates from sales and the as a rule underestimated backlog are the main cause, in addition to the widespread safety mentality. We will not be able to handle this with intelligent materials planning. What we need is a harmonized enterprise. 

Yet we can attack all other unnecessary inventories with reliable analyses. In this way, we will find their sources and thereby rapidly reduce the resulting inventories. 

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Once you have identified the unnecessary scopes for each reference number, sort them in descending order, and talk to the responsible managing clerks about the greatest deviations - the value is more important than the scope. Search for the causes and eliminate them so that they can never turn up again. This is an activity that you can implement instantly. It produces lower inventory immediately. 

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