Inventory reduction

Inventory represents unproductive investment, although it may be necessary to hold some inventory to cushion against demand uncertainty. In the supply chain inventory is held at multiple stages, upstream and downstream. Because of the value added, it is more expensive to hold inventory downstream. Customer order decoupling, discussed earlier, is one of the ways of reducing downstream inventory. 

In general, inventory can be positioned at each tier of the supply chain. While it increases responsiveness, it causes decision making to become complex. Such a system with multiple tradeoffs is modeled as multi echelon inventory optimization. 

Inefficient inventory replenishment can be major source of cost in a supply chain. Replenishment management determines optimal order quantities to minimize the combined cost of inventory holding and shortages, for individual suppliers and customers. In a supply chain, additional constraints such as the coordination of flows from vendors to distribution centers (DC) and from DC to stores, moderate replenishment decisions. Moreover, replenishment decisions must incorporate orders from multiple channels such as catalogs, and the internet. 

Cabelas restructured its operations by centralizing common functions while still satisfying diverse customer needs through distribution centers (DC). It implemented a new warehouse management system to organize retail replenishments and fulfillments out of the DCs. It also provided the ability to accurately forecast, purchase and replenish inventory in advance of demand. Cabelas could tailor the product-assortments to each channel, using channel-specific attributes and metrics. 

Warehouse management was implemented in three DCs, two return centers, and several stores, to integrate inventory with other systems. It was initially focused on the DC-to-store channel and was then integrated into the catalog and internet channels. The replenishment procedure calculates daily orders in response to actual sales and updates inventory positions. Each inventory item is forecast weekly on a rolling horizon basis, and order projections are provided to the DCs and vendors. Additional capabilities include system-generated seasonal profiles, demand alerts, purchase order alerts, and order frequency optimization. 

---

Inherent safety Inventory reduction Fewer chemicals inventoried or fewer in process vessels. Chemical substitution Substitute a less hazardous chemical for one more hazardous. Fr ocess attenuation Use lower temperatures and pressures. 

Tubular reactors often offer the greatest potential for inventory reduction. They are usually simple, have no moving parts, and a minimum number of joints and connections that can leak. Mass transfer is often the rate-limiting step in gas-liquid reactions. Novel reactor designs that increase mass transfer can reduce reactor size and may also improve process yields. 

Similarly, hazardous raw material storage should also be minimized, with greater attention being given to just in time supply. Inventory reduction lowers inventory costs, while increasing inherent safety. In determining appropriate raw material inventories, the entire raw material supply chain must be considered. Will the supplying plant have to increase inventories to provide just in time service, and will... 

Obviously, the risk of hazardous chemicals is reduced by a minimized inventory using just-in-time procurement. If further inventory reduction is not feasible, additional risk reduction may be achieved by dispersing the inventory to multiple site locations so a release in one location does not allcci other locations of inventory. 

Industrial fire protection and safety engineers attempt to eliminate hazards at their source or to reduce their intensity with protective systems. Hazard elimination may typically require the use of alternative and less toxic materials, changes in the process, spacing or guarding, improved ventilation or, spill control or inventory reduction measures, fire and explosion protective measures - both active and passive mechanisms, protective clothing, etc. The level or protection is dependent on the risk prevalent at the facility versus the cost to implement safety measures. 

Design techniques for an inherently safer plant include improved layouts, inventory reduction, and process improvements. 

Inventory reduction may involve simply reducing the quantity of hazardous materials on hand at any time, including producing hazardous materials as needed rather thatn storing them against future need. 

Preventive measures provide conditions where the incident is unlikely to happen, but its occurrence cannot be totally avoided. In this category, we find measures such as inventory reduction for critical substances, the choice of a continuous rather than a batch process leading to smaller reactor volumes, and a semi-batch rather than a full batch process providing additional means of reaction control. Process automation, safety maintenance plans, etc. are also preventative measures. The aim of these measures is to avoid triggering the incident and thus reducing its consequences. In the frame of mnaway risks, a mnaway remains theoretically possible, but due to process control, its severity is limited and the probability of occurrence reduced, such that it can be controlled before it leads to a critical situation. 

One measure of the inherent safety of a process with respect to fire and explosion risk is the Dow Fire and Explosion Index (12). Table 1 shows examples of the impact of inventory reduction on the Fire and Explosion Index. 

Tubular reactors often offer the greatest potential for inventory reduction. They are usually simple, have no moving parts, and a minimum number of joints and connections that can leak. 

Losses, errors, and inventory reduction following destructive testing should be reported and recorded. Stockholding inventories should be adjusted to reflect these activities. 

The implementation of CMMS and EAM will include an inventory system that totally supports the requirements of maintenance and the storeroom. Maintenance inventory wfll be managed to ensure that the right part is available at the right time without excessive inventory levels. Information from aU available sources will be used to determine optimum stock levels. A continuous review of stock levels will be made to eliminate excess inventory and obsolete parts. Inventory reductions will be achieved through more partnerships with suppliers and vendors that establish joint commitments to purchase based on responsive service and fast delivery. Positions within MRO material management and procurement wfll increase in their importance and level of technical knowledge to perform effectively... 

Number of stock outs Evaluates the MRO inventory/materials management process capability to have the on-hand quantities needed for stock items that are normally stocked in the maintenance storeroom. Provides an excellent countermeasure to ensure planned inventory reduction goal is not detrimental to storeroom customer service. Does not measure nonstock items that require requisitioning/purchasing as direct purchases or availability of project-related items. Percent inventory accuracy Maintains accurate fiscal accountability of stocked items to ensure total confidence in current inventory levels and dollar value of MRO inventories. Measures the effectiveness of the cycle-counting process and storeroom control. 

Dollar value of MRO inventory reductions Helps to ensure that proactive MRO inventory management practices and those well-planned MRO inventory reductions are given proper credit and recognition within the organization. This reduction may also serve to offset additions to inventory of more useful items and critical spares. 

The Maintenance Excellence Index (MEI) The sample MEI shown in Table 8 provides a composite index that integrates a number of key metrics. Each metric can also be monitored and trended individually. The MEI helps keep in focus the fact that the success of maintenance operations depends on many factors. Therefore, one or two metrics can t provide the total performance picture. The MEI concept provides a complete approach to maintenance performance measurement. If a maintenance process improvement has been justified on craft productivity increases, parts inventory reduction, maintenance cost per unit of output reduction, or value of increased asset uptime, the original projection of benefits and savings can be validated with the MEI. 

Reduced storeroom inventory A CMMS provides the means for more effective management and control of maintenance parts and material inventories. Information for decisions on inventory reduction is readily available to identify parts usage, excess inventory levels, tmd obsolete parts. 

Industry progress on inventory reduction and snpply chain working capital is stalled. 

S OP team has a proven track record of inventory reduction, customer service increase and higher profitability. 

There is low finish goods and raw material write off in the supplier operation and there is a clear inventory reduction without lost of sales. 

---