IT.UA - home page

Inventory management strategies

Production for the order when the production of the final product and all its semi-finished products is planned only for a specific customer order, and the purchase of materials is made under the forecast of demand. At the same time, the emphasis in inventory management is shifting towards the planning of stocks of the most frequently used materials.

This strategic approach is applied to final products that have

• difficult to forecast demand for a specific brand size
• different specifications and additional requirements for one brand size: specifications, custom lengths, etc.
• for small batch production

Production to the warehouse, when production planning is carried out mainly on the basis of demand forecast. In this case, the central element of inventory management is finished goods.

This strategic approach is applied to final products that have:

• consistently predicted demand for a specific brand size
• meeting typical customer requirements

Assembly for the order when on the basis of the demand forecast it is planned to manufacture typical semi-finished products used in most types of finished products. In this case, the production of finished products is carried out only for a specific order of the client and the focus of attention is the management of stocks of semi-finished products from which the final assembly is made.

This strategic approach is applied to final products that have:

• consistently forecast demand for product groups, in the manufacture of which the general part of the production cycle is used (typical semi-finished products)
• different specifications and additional requirements for one final brand size
• for large and medium-sized products

Definition of stock management strategy for finished products

Definition and selection of a strategy for managing stocks of finished products is carried out using an ABC, XYZ analysis based on:

• sales and inventory statistics
• analytical data used to determine the commodity-nomenclature groups of finished products and type representatives
• analytical data used to determine the type of semi-finished products within each commodity-item group of finished products and/or type representative

The result of a business process for each brand size can be the following:

• identified and fixed in IT-Enterprise system inventory management strategy
• identified product nomenclature group or type representative for inventory management
• identified typical semi-finished products within each commodity-nomenclature group of finished products and/or type representative

In the framework of the selected strategies, appropriate inventory management techniques are applied:

• Inventory management based on MRPII, APS, MES standards - a management method based on hierarchical planning of sales, production and purchases (master schedule, plan of confirmed production orders, APS-synchronous production planning, MRP plan (semi-finished production planning), MES-planning (in-plant production planning), procurement plan)
• Management of re-order point at the level of stocks of finished products - a method of automated maintenance of stocks of finished products, based on statistical data
• Management of re-order point at the level of standard semi-finished products - a technique for automatically maintaining the level of typical semi-finished products based on statistical data

In this case, the re-order point can be:

• level of stock reaching which it is necessary to place a new order to replenish the remaining resource in stock
• period of time after which it is necessary to form an order for the replenishment of the warehouse