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2008 Data Services Training Conference

2008 Data Services Training Conference. Controlling Your Inventory 101. Johnstone Support Services. Launched in 2004 in order to strengthen the Cooperative by strengthening its Members. Agenda. What is Inventory Management Cushy Job… Dead Inventory Correction Prevention

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2008 Data Services Training Conference

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  1. 2008 Data ServicesTraining Conference Controlling Your Inventory 101

  2. Johnstone Support Services • Launched in 2004 in order to strengthen the Cooperative by strengthening its Members

  3. Agenda • What is Inventory Management • Cushy Job… • Dead Inventory • Correction • Prevention • Redundant Inventory • Accuracy • Saw Tooth • ROP & EOQ • Upcoming Changes

  4. I’m the What and Why Guy…

  5. What is inventory management ?

  6. Text Book: Inventory Management answers the following questions: • When should an order be placed for a product? • How large should each order be?

  7. Volunteers ? ? ? ?

  8. The Cost of inventory Less Inventory More inventory • Stock outs • Purchasing costs • Receiving costs • Payables costs • Freight • Obsolescence • Carrying costs • Cash flow • Capacity

  9. Grant me the serenity to Managethe things I can Control, toInfluencethe things I can Affectand Compensate for the things I Cannot Influence …knowing all the while that I will always have too much or not enough but never the right amount of inventory! The Definition of Insanity

  10. Forecasting Process Run Forecast Probably Can’t Trust It Beg for More Information Increase the Min Or Safety Stock Process Good Don’t Believe In It Go With Your Best Guess Not Coming Abandon All Hope for Inventory Reduction Evaluation Not Good Figures Don’t It? Despair Begin Preparing Excuses Blame Customers, Systems And Suppliers Correction

  11. Which has the greater impact “What” to Carry or “How Much”?

  12. Unintentional Inventory

  13. Unintentional Inventory Safety Stock New Products Redundant Stock “Dead” Stock • Bias Towards Avoiding Stock Outs • Manual Forecast • Bad ROP’s • Month’s Supply Rule • No Guaranteed Sale • No Marketing Plan • No Follow Up • No Return • Duplicate Lines • Duplicate SKU’s • Special order not picked up • Special order not cancelled • Standard Pack Remainders • Unsuccessful New Product • Discontinued • Superseded • End of Product Life Cycle Supplier Issues Speculative Stock Idle Inventory • High Minimum Prepay • Long Lead Time • Erratic Lead Time • Unreliable Fill Rate • Standard Packs • Trade Show • Preseason • Price Increase • Dating • New Store • Mild Season • Redistribution

  14. The Cost of Dead Inventory

  15. 9 Lives of Dead Inventory • Specific Process for Reducing Dead Inventory • Identify • Set Dead Parameters on 27.1.21 “E” inventory • 6.16 Recalculate “e” Items on demand – 365 Days No Activity • 6.13 List of “E” Items from Last Calculations • Count it – make sure it’s really there… • You may want to pull it and set it aside or even bin locate it • Rerun report

  16. Disposition

  17. 9 Lives of Dead Inventory

  18. 9 Lives of Dead Inventory

  19. 9 Lives of Dead Inventory

  20. 9 Lives of Dead Inventory

  21. Prevention…all dead stock is preventable…

  22. Dead Stock Prevention • Customer orders not picked up • Hang out Report • Deposits on special order (particularly non-returnable) products • Cancelled customer orders for special ordered products - and linkage to the purchase from vendor • List of Inventory Problems

  23. Enhancements to List of Inventory Problems (U2008.1 – job 128707) • New parameter: Multiple over ROP - currently this is hard-coded to 2 times ROP, change to “1”. • Add to Menu-6 to run this report on demand for beginning/ending dates (see JCI custom menu) • Menu-8.4 Inventory adjustments that put them over reorder point will be included • Any order quantity that is less than '‘P'' pack and ROP = 0 will be included • Discontinued items will be included • Add ''on order'' column to the report • Change items that say '‘OE'' to '‘CANCEL''

  24. Dead Stock Prevention • Customer orders less than standard pack amounts • Customer returns on special ordered products • List of Inventory Problems • Past due PO's from vendors on special ordered products  • Past Due PO Report

  25. Dead Stock Prevention • New stocking products • Introduction - authority, guaranteed return terms, review of duplication, etc • Review and disposition • Who, when, what happens then? • Review and handling of items carried for specific customers • Handling of items in decline (i.e. dropping ABC code from A to B, B to C etc.) • Reporting,  review and handling of product discontinued from supplier

  26. Product Redundancies

  27. What the…? • Vacuum Gauges • Supco • J/B* • Vacuum Pumps • Ritchie • Refco* • Robinair • J/B* • Refrigerant Recovery • Ritchie • CPS • Inficon • Bacharach • Appion • Promax RG5410 • Decide later • Refrigerant Leak Detectors • Johnson Controls • Ritchie • Inficon • TIF • CPS • Spectronics • Amprobe Ultra Sonic • Decide later • Tubing Tools • Ritchie • Ridgid* • Imperial • J/B • Lennox • JE decides • Access Fittings • J/B* • C & D • Manifolds, Hoses, and Gauges • Ritchie* • J/B* • Uniweld • CPS • Imperial • Zeppelin • Mini-Splits • Fujitsu * • Comfort-Aire • LG • Samsung • PTAC’s • Amana * • Friedrich • G/E (Monroeville)* • Window A/C • Comfort-Aire • Friedrich* • Chemicals- Refrigeration Oils • Nu-Calgon • Virginia KMP • -Copeland Oil • Acid Test Kits • Virginia KMP • Nu-Calgon • Pressure Temperature Controls • Johnson* • Ranco* • Evaporative Coolers • Heatcraft* • Peerless • Commercial Defrost Timers • Paragon* • Grasslin (G33-030 Butler) • Refrigerant Scales • TIF • CPS • Refco* • Infrared Thermometers • UEI* • Fluke • Raytek • TIF • Manometers • UEI* • Dwyer (Fluid)* • Ritchie • Testo • Carbon Monoxide Tester/Analyzer • UEI* • Testo* • Bacharach • Fluke • Test Instruments • UEI* • Fluke • Fieldpiece • Combustible Leak Detectors • UEI • TIF 8800* • Bacharach • Sheetmetal Tools • Malco (largest variety)* except snips • Lenox • Midwest (snips only)* • Condenstae Pumps • Little Giant* • Diversitech • Hartell • Pipe Insulation • Armacell • Rubatex • Best deal • Pipe wrenches • Ridgid* • Lenox • Infrared Heaters • Infrasave • Modine • DNS • Motors • Emerson* • A.O. Smith* • Others • Belts • Browning* • Johnstone • Boiler Trim Package • Watts • Honeywell* • Duct Tape • Nashua • Polyken • Shurtape • Zip Screws • Malco* • Duradyne • Torches • Turbo-Torch (Victor)* • Uniweld • Flashlights • Energizer • Maglite • Terralux • Streamlight • Clipmate • Heat Guns • Milwaukee • Weller*

  28. Redundancy • More training • More space • Less accurate forecasts • Higher risk of stock outs • Higher safety stock levels • Higher risk of obsolescence • More ordering costs (purchasing, receiving, put away and payables) • Customer confusion

  29. ROP & EOQ Theory

  30. Order quantity = Q (maximum inventory level) Usage Rate AverageInventory (Q*/2) Inventory Level Minimum inventory 0 Time Sawtooth

  31. ROP Theory Incoming Orders Total Inventory ROP Untapped Inventory Safety Stock Time Lead Time

  32. Inventory Accuracy

  33. Lowering the Swamp

  34. ROP Theory Incoming Orders Total Inventory ROP Untapped Inventory Safety Stock Time Lead Time

  35. Inventory Accuracy • Inventory Accuracy • Remaining Quantity Counts • Control Group Counts • Prevention vs. Correction • Cycle Counting Annual Count Cycle Count

  36. Count Control Adjustments Needed? Count Scheduled Count Conducted Check Transactions Count Communicated Tags Collected Check Receiving, Shipping WC & Counter Recount By Policy Adjustments Needed? Make Adjustment Yes Area “Tagged” & Cut off Checked No Finish

  37. EOQ vs ROP

  38. ROP Theory Incoming Orders Total Inventory Excess Inventory ROP Safety Stock Time Lead Time

  39. EOQ Theory Total Cost Total Cost Holding Cost Order Cost EOQ Order Size

  40. Volunteers ? ? ? ?

  41. Scenarios • Normal Lead Time from vendor is 10 days. They are now backlogged 22 days… • Less ? More? Stockout? • There’s a 4% price increase coming up in 30 days on your main equipment line. You buy 4 months supply… • You consolidate Gates, Browning and Johnstone Belts into a single line… • You maintain tight control of your inventory levels and only reorder whatever was sold last week… • Your inventory accuracy is only 84%...

  42. Scenarios • You buy a 2,500# Mueller order on a drop ship saving an average of 3.5%... • You return $29k on your Corp Rotational Buyback… • You improve inventory accuracy… • You order in a standard pack of 12 for a customer who ordered 5 … • You begin a program to review & return non-moving inventory within 60 days of receipt on the Corp Buyback… • You follow up on hang out and past due POs…

  43. Questions…?

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