Are these killer apps in your future?
Warehouse technologies that could prevent problems
by Dick Friedman
Distributors who are using inventory management software that can be modified may want to change it in ways that reduce excess inventory — without hurting customer service — and reduce shortages. Other benefits of these changes include reduced purchasing efforts, rush orders, expediting, clearance sales and returns to vendors (for returnable items). And, warehouse space would be freed up, and less effort would be needed for receiving, put away and counting. Warehouse staffing also might be reduced.
Here is an outline of some of the changes, which are all meant to function automatically, so little or no human intervention is needed:
- Analyze order history data for unusual data that would distort inventory levels, and if a condition is within a pre-defined tolerance, adjust the data; if a condition is outside the tolerance, list the item on an action report.
- Calculate safety stock based on target service level and the factors that can result in not having enough planned stock on hand when it's needed.
- Allow for trends when calculating lead time.
- If the history data for an item is outside the tolerance, don't calculate safety stock, lead time or a forecast; list the item on an action report.
- If the history data for an item contains too many aps, don't calculate safety stock, lead time or a forecast; list the item on an action report.
- Treat very slow moving items differently from items that move fast but don't require human intervention — treat them automatically.
- Let the system determine the most accurate method of forecasting.
- The system can determine the most profitable service level.
- Identify items for which the service level is too high.
- Calculate the true cost of buying more than is needed now, vs. waiting and buying later.
- Calculate whether a deal is too good to be true for the distributor (it's always good for the supplier).
Dick Friedman has 25+ years of experience helping distributors avoid selecting the wrong new system and overpaying. Call (847) 256-3260 for a FREE consultation, or visit www.GenBusCon.com for more information or to send e-mail.
This article originally appeared in the May/June 2011 issue of Industrial Supply magazine. Copyright 2011, Direct Business Media.