Inventory Effectiveness

Description

Inventory Effectiveness measures the process of having the right part at the right place at the right time, with minimal investment that meets the customer requirements. Inventory is influenced by lead times, variability of supply, variability of demand, product complexity, service level agreements, product substitution, obsolescence and life cycles, material costs, carrying costs, investment strategies, cost of money, warehousing space and logistics (locations, distances, transportation methods).

Common Metrics (Top 4)

1. Inventory Turns
2. Inventory Accuracy
3. Safety Stock
4. Stockouts

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Best Practice (Top 5)

1. Sales & Operations Planning
2. Forecasting Techniques
3. Lean Manufacturing
4. Postponement
5. Bar Coding / RF

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