Inventory Management Advice

Making better use of the data in your inventory system

Replenishment Cycle

Replenishment Cycle

Consider what I will refer to as the “net quantity” of an item which is the quantity on hand plus the quantity on supplier order minus the quantity on customer back order. Reordering takes place when the net quantity falls strictly below a level known as the reorder...
ABC Analysis

ABC Analysis

Pareto Principle The Pareto Principle is named after an Italian economist Vilfredo Pareto who noticed that 80% of the peas which he grew in his garden came from about 20% of the pods. He also found that, in most countries, about 20% of the population owns 80% of the...
Active Inventory

Active Inventory

Active inventory is inventory which will probably be sold or used in the reasonably near future. How far into the future depends on how soon you are hoping to see the expected improvements. The reason for finding out how much active inventory there is is that only...
Active Inventory

Days Cover

Converting a quantity (e.g. stock on hand) to the number of days cover it provides is not quite as simple as dividing the quantity by the average demand per day. Consider an item which moves, on average, once per year and which is out of stock. The fact that item is...
Active Inventory

Choosing a System

When choosing an inventory system or ERP system, the first three things you need to do are to document all of your requirements, make sure that you have documented all of your requirements and make absolutely sure that you have documented all of your requirements. The...