INVETORY MANAGEMENTPresented By:

Leydi VelezAhmed Al ShaeefHerbert GuerreroJohn Herrera EIN 5346 Logistics Engineering Chapter 9

AgendaContemporary Approaches to Managing InventoryInventory Management SoftwareVendor-Managed Inventory (VMI)Just-in-Time (JIT)JIT Case Study

Inventory Management Software

Inventory Management SoftwareBenefits:Eliminate manual inventory management processes thereby reducing errors and lead time.Provides managers easy access to the numbers that are needed for reporting and restocking information. Provides complete real-time visibility into demand, supply, costs and fulfillment measures and trends.Significantly improve your relationships with suppliers, vendors and partners by providing self service and real-time visibility.

Improve demand planning/reduce forecast error rate Reduce lost sales and backorders Increase inventory turnover Manage large numbers of styles and SKUs efficiently and accurately Improve management understanding of forecasting and inventory management process and performance Increase sales and profits

Benefits Continued:Inventory Management Software

Inventory Management SoftwareinFlowSales Sales Orders and Customer InformationPurchasing Purchase Orders and Vendor InformationInventory Product Information, Stock Quantities, Stock Adjustments, etc.Reports Reports offered by inFlow to gather and share information

Inventory software for small to mid-sized businesses. divided up into four main modules:

http://www.inflowinventory.com/Download options:Free Edition, Regular Edition ($299/license), Premium Edition ($499/license)

Software development company providing Inventory Control Software for 3PL Public Warehouses, Manufacturers, and Distributors.

Inventory Control TrackerTMInventory records are updated automaticallyNotifications (reaching expiration date)Multiple warehouse trackingTrack items by item #, lot #, production code, date, carrier, consignee.Traker Systems http://www.trakersystems.comEditions: 3PL Public Warehousing Edition, Manufacturing & Distribution Edition, Lite EditionInventory Management Software

FishBowl InventoryInventory Management system for small to medium-sized companies that integrates with Quickbooks. Features:Multi-location inventory trackingManufacturingPart TrackingUnit of measureDrop shippingBar codingCredit card processingVariable pricing and discountingOrder pickingKittingwww.fishbowlinventory.comInventory Management Software

AdvanceWare Technologies, AdvancePro Inventory http://www.advanceware.net

NetSuitehttp://www.netsuite.com/portal/products/netsuite/supply-inventory/main.shtml

Direct Tech, Inc. Forecast*21 (Inventory forecasting)http://www.direct-tech.com

Inventory Management Software

Inventory Optimization SoftwareMincom Critical Inventory Optimization (MCIO) is anintelligent, predictive software solution that identifies the optimal holdings of every stock item based on usage patterns and criticality. MCIO automatically analyzes and adjusts stock levels and reordering requirements on an ongoing basis.SmartOps Enterprise Inventory Optimization (EIO) is a comprehensive suite of software modules that enables organizations to plan and manage inventories across global supply chains. SmartOps EIO encapsulates sophisticated, proprietary algorithms into software that integrates with enterprise planning systems and handles large-scale, complex supply chains in a dynamic and automated manner.

JDAs Network & Inventory Optimization uses deterministic and stochastic optimization combined with flexible user-interface and analytical workbenchesSmartcorp uses proven forecasting solutions that accurately predict, for each product item, the most likely or expected value for demand over a given lead time. The safety stock recommendations and stocking level estimates that are generated are immediately available for use in other parts of your corporate planning systemInventory Optimization Software

Vendor-Managed Inventory

Challenge

Due to increased global complexity, companies are experiencing long lead times and high demand volatility. This has resulted in an increased emphasis on managing inventory. Identifying the best practices and the best tools to accomplish this has become critical

Vendor Managed InventoryVMI is the process where the supplier generates orders based on mutually agreed objectives and demand information sent by the customer.

Main ActivitiesSupplier/Vendor has access to customers inventory dataSupplier/Vendor is responsible for maintaining the inventory level required by the customerSupplier/Vendor replenishes inventory via scheduled reviews

BenefitsCustomerAutomate Replenishment processReduced inventoryReduced operating costsFocus on core processIntangiblesShorter cycle timeGreater customer satisfactionAvoid stock-outs

SupplierIncreased volume Forces disciplinesMeasurementsCommunication Better planning and resource useVisibility via information sharing Need to eliminate or reduce non-value-added activities Reduce safety-stock

How to make it workClarify expectationsHow the system will benefit both organizations in the long termAgree on how to share informationEnough information to maintain a steady flow of goods is necessary Keep communication channels openMisunderstandings need to be studied as opportunities for learning and then used to avoid repetitive problems in the future

VMI Flow

Performance MeasurementsHow to ensure VMI will enhance the business?Establish measures identify the goalStarting number of items vs. expected goalInventory $ initially vs. expected goalTotal inventory $ at start, during, and after

MeasurementsOperational improvementsInternalThe number of stock outs and durationCost of material/service before and afterExternalCustomer satisfactionImprovement of delivery availabilityOther points as defined by the partiesCompetitive advantage considerations

Just-In-Time (JIT)

JUST-IN-TIME (JIT)JIT is originated in Japan as part of the Toyota Production System in the approach to a Lean Production System.

JIT is a strategy that strives to improve a businesss return on investment by reducing in-process inventory and associated carrying cost.

JUST-IN-TIMEJIT means making only what is needed, when it is needed, and in the amount needed.

JIT supplies what is needed, when it is needed, and in the amount needed according to the production plan to eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity

JIT removes inventory to expose production flaws that can be corrected or removed in order to improve production quality and increase efficiency and effectiveness .

PROGRESSION TO JIT

JUST-IN-TIME EFFECTSIncrease factory response time.

Improve customer satisfaction.

Build of make-to-order models to eliminate the risk of no being sold.

Standardization of parts assemblers increasing product quality.

Reduce setup time allowing the company to reduce or eliminate inventory for change-over time.

The flow of goods from warehouse to shelves improves by reducing lot sizes to simplify inventory flow and inventory management.

JUST-IN-TIME BENEFITSEmployees with multiple skills are used more efficiently by having the flexibility to move employees where they are needed.

Production schedule and work hour consistency is synchronized with demand by avoiding paying overtime or focus resources to other areas.

Increase emphasis on supplier relationship.

Supplies comes in at regular intervals through the production day by synchronizing the supply with the demand.

JUST-IN-TIME LIMITATIONSPreconditions to JITTrust must be present between labor/management as well as suppliers/consumers Recognition of processes Familiarity with problem solving Quality at the source Agreement over value and waste

Right Settings Applicable in growth to maturity phases of Product Life Cycle Standard Product Standard/Fixed Pay-Rate Problems with Piece-Rate Scheme

JIT operations may leave suppliers and consumers open to supply shocks and large supply or demand changes.

JIT Case StudyStopping Stock Outs with Anixters Just-in-Time SupplySource: http://www.anixter.com

Case study: AnixterAnixter is a leading global supplier of communications and security products, electrical and electronic wire and cable, fasteners and other small components. They provide innovative supply chain management services to reduce customers' total cost of production and implementationFor more than five years, Anixter has developed a relationship with a major manufacturer of medical equipment. Anixter supplies this manufacturer with a variety of fasteners directly delivered to its production facility. The fasteners are used to build medical equipment from lighting and cabinets t electro cardiogram testers and examination tables

Case study: AnixterBefore Anixter started working with the company, a normal turnaround on the delivery of parts would take a week. This slow turnaround increasingly led to delivery delays and out-of-stock situations to cover for the delays and stock-outs. On-site inventory levels were also increased to cover potential shortages.

ChallengeMinimize turnaround on delivered parts.

SolutionAnixter applied Just-In-Time supply chain with the objective of keeping the required amount of products on the manufacturing floor.

Case study: Anixter

Case study: AnixterTwo manufacturing facilities located in close to each other.More than 2,000 bins placed in sevenstocking locations spread across the two facilities.The company placed between 300 to 800 line orders a week. Providing between 900 and 1,000 part numbers.Each of the stocking locations needed to meet a specified min/max range to meet production goals without overstocking material.

Case study: Anixter

Anixter implemented a Just-in-Time program that shifted the inventory to Anixters distribution center to allow for a controlled and planned release of material to the production facilities.Anixter established a schedule that allowed the Anixter employee to scan the bin levels on a weekly basis.During the course of the first year, Anixter worked with the customer to create usage forecasts.

Solution Anixter generated weekly usage reports, which created minimum and maximum quantity ranges on the used products without risking stock-outs or over-delivery. Based on two- to eight-week requirements, Anixter successfully worked with the customer to reduce the amount of on-hand materials and create an efficient just-in-time solution that kept the required amount of products on the manufacturing floor.

Program ResultsForecasting allowed the manufacturer to gain greater control over its inventory and set expectations of the levels of materials that would be kept on the production line and in its storerooms. Instead of everything going through separate steps from a buy to expediter to receiver to quality control to builder, everything is handled by Anixter.The manufacturer only had to focus on the building of its products.The company has set a goal of doubling its profits in five years. Reducing its supplier base by half. Because of Anixters just-in-time program, the supply chain has built-in flexibility to meet shifting demands.

Benefits Obtained

Reduced capital investment in components and associated costsIncreased facility spaceIncreased efficiency Improved single point of control for all material receiptEliminated production line shortages and delays

Questions ?

***Continuing advances in computer hardware and software have given many companies the capability of monitoring their inventory and determining their ROP and EOQ.

******************John: Please include more detail on the origin of JIT in this slide.***John: These sound like benefits to me.**John: can you try to find more limitations of JIT?***********