Inventory Optimization Report Final

7/31/2019 Inventory Optimization Report Final

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CPE Inventory Optimization Project

July 30, 2008Javier Sanchez


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Inventory Optimization Report

Points of Discussion

Definition of the Problem

Root Causes

Current Process Map

Improvement Opportunities

Suggestions for opportunities found

Financial Benefits


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Problem Definition

Shipping costs in May increased $61k due toexcessive overnight shipments of CPE

Stock requirement analysis is manual, timeconsuming, and cumbersome

Suspect we may retain excessive stock in some

products (See Annex # 2 for Details)


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Root Causes

Shipping costs in May increased $61k due to excessive overnight

shipments of CPE Stock-out due to:

> Delay in approving PO

> Delay from Vendor in getting the PO in their system

> Delay in normal vendor shipping time frame

Re-Stocking analysis is manual, time consuming, and cumbersome Systems provide pieces of data that must be manually manipulated in

Excel to obtain:

> Field shipment orders

> Stock replenishment quantity

Suspect we may retain excessive stock Lack of generally accepted stocking methodology to manage stock


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Start

InventoryInformation Systems

Inventory Gets the reportOf products needed for

two week period

SalesSales Person enter

info. on MSS

Inv. Ships the productto Market Site

Inventory depletes stockfrom Warehouse Using

the Replenishment System

Inv. Package the Product

Market Sites Receiveequipment

Distribution to differentsites

Market Sites enters equipment intoMSS as equipment Available

Sites Receive OrdersTo install equipmentField Tech. Change MSS

Equipment from Available to In Service

Field Tech. Goes and InstallEquipment Field Tech. Deletes Equipment

From MSS.

Nuvox Bills the customer

$

Nuvox Bank

RICH PICTURE OFINVENTORY SYSTEM

(System # 1 )

Sub- System 2

Sub System# 3

Current Process High Level


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Current Process

INVENTORY HANDLING PROCESS

Inventory goesto MSS and pullReports in order

to find what'sneeded to be

shipped tomarket sites

Not Installed Report(NIR)

TSP ScheduleDrillable Report

Installed YTD Report(IR)

Cleaning Reports

Combine all TSP Reportsinto one

Called Total TSP

Conbine Total TSP intoNIR

Combine IR into NIR

Rename NIR to CPESummary Report

CPESummaryReport issent to

warehouseElectronically

Warehouseverifies reportwith currentinventory(Manually)

Warehouseprepares

material to beshipped

WarehousecreatesPOs of

inventorythat will beshipped.

Warehouseships the

product/s tomarketsites

Marketsites

receiveequipmentand enter it

into thesystem

Financialreceives

POs

electronically

POs

approved?

Yes

No

Request ofinstallation isneeded andMarket site

assigns serial #to customer POand change theclassifications

Market siteinstalls

equipment

FieldTechnicianreturn to thesystem anddelete partfrom thesystem.

End

Warehousereceives

confirmationelectronically

Warehousefax the POs

to Supplier

SupplierreceivesPOs and

send back aconfirmationemail with

delivery time

Supplierprepares

and sendsequipment

Warehousereceives

equipmentand store it

Warehousekeeps

copies ofopen POs

Confirmationnotice is store

on thecorresponding

Open PO

Warehouseattached

closes thePO with the

receiverfrom

supplier.

End

Delay Process

3 .1 .5 2 40 1 .5 3 .25

.5 .25 40 .1 .25 40 160 2

50.35hours/6.3 Days

261.72hours/32.71

Days

Non Valueactivities

Chance forImprovement

Non Value, but notaffecting the

process

NVA= 3TNVA=3

VA=0TVA=0

NVA= 1.5TNVA=247.1

VA=.5TVA=1.6

NVA= 160TNVA=245.6

VA=0TVA=1.1

NVA= 40TNVA=85.6

VA=0TVA=1.1

NVA= 0TNVA=45.6

VA=.25TVA=1.1

NVA= 40TNVA=45.5

VA=0TVA=.85

NVA= .25TNVA=5.5

VA=0TVA=.85

NVA= .1TNVA=45.6

VA=0TVA=.85

NVA= 1.75TNVA=5.25

VA=.75TVA=.85

NVA= .5TNVA=3.5

VA=0TVA=.1

NVA= 0TNVA=3VA=.1TVA=.1


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Improvement Opportunities

Less Regimented PO approval process

Automatic re-stocking analysis

Utilize bar code scanners to integrate withinventory system

Decrease supplier lead time


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Improvement Actions

Develop fully automated daily report to provide re-stock amounts and field shipping details. Field Shipping detail:

> Order #> CLLI> TSP Date> Market> Equipment

Re-Stock Amounts> Part Number> Quantity

.

Develop process to incorporate scanning devices to place inventory data into inventory system.

Enhance CPE approval process. Provide Harold with unilateral authority to replenish stock to system-driven stock level Generate daily/weekly reports to advise executive management of capital commitment Special capital purchase circumstances, such as TitleMax, will be handled ICB

Pursue new vendor supply strategy to reduce lead time to delivery. Vendor retain 2 months of stock on hand Commit to next day shipping Will probably have to guarantee payment for on hand stocked items


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New Process

Sub-System # 3

Start

Inv. Goes to the

System and gets areport of what is

needed to ship forthe market sites

Inv. Open the R.S.

model 100004-LG-XX and goes to

the Data BaseSheet.

On the Data Base,

update what isgoing to be

shipped as out ofstock.

Verify each

product on theupdatable

demand sheet

Does the productsays order Now

Create a PO for

what is indicatedto order on the

Updatable

Demand Sheet

Save thedocument and exit.

No

Yes

Fax PO to VendorAnd notify

Financial ofpurchases made.

Monitor POs for

fast delivery.

ReceivedEquipment using

Bar Code andstore it.

Update R.S onData Base Sheet

End

NOTES:

RECONCILIATION AND DEMAND MUST BEMONITORED ON A DAILY BASES


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Mathematical Model


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1111

Daily Data Base


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Updatable Demand


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Financial Benefits


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Financial Benefits 1 Day


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Financial Benefits 5 Days


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Example of Calculation

Note:There is potential of 10 Extra Days of Savings if we negotiate a win winstrategy with our supplier.

Potential Savings off an additional $468,994

Based on the 16 CPE productssavings are:

One Day= $46,630

5 Days= $233,703


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Annex 1

ABC Classification

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2431-16 2431-8 2432-24 2431-T1E1 VWIC-1MFT-T1 VWIC-2MFT-T1 2821 PVDM2-64 3845

Products

2007/2008

UnitCost

0

20

40

60

80

100

120

Items

Accumulative %


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Summary

Enhance PO approval process

Immediate one-time savings of $233,703

Automate Field distribution reporting Eliminate manual labor increasing accuracy

Automate the re-stock analysis system

Immediate one-time savings of $326,180~ Optimizes stock levels Minimizes capital commitment

Potentially decrease supplier lead time Additional potential savings of $ 468,994


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Annex # 2


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2020

0

200

400

600

800

1000

1200

2431-8 2431-

T1E1

2821 VWIC-

1MFT-

T1

PV

DM2-64

NM-

1T3/E3

VIC2-

2FXS

VIC2-

4FXS

HN-

404-

CP-1E-I

MinInv based on lead time/product

Current Inventory

Annex # 3 Current Inventory Levels

Inventory Optimization Report Final

Documents

Transcript of Inventory Optimization Report Final