Abstract

The level of automation in Inventory Management is increasing day by day. In ERPs various parameters have to be defined to achieve even simple levels of automation like Reorder-Point, Minimum Order Quantity, Lot-Size, Lead-Time etc. Inventory Management with today’s ERP systems can become simpler if the parameter settings of Materials Requirement Planning (MRP) and Master Production Schedule (MPS) are clearly understood and mapped. Various Inventory Classification methods are used like the ABC, XYZ, VED, FSN, HML, SDE etc. to group the products and maintain similar parameter settings for different group of products. Each parameter setting and product classifications have underlying assumptions. In our daily business the underlying assumptions may often be overlooked. The primary objective in this study is to highlight one of the assumptions taken for granted and to find an optimized solution for Inventory Classification for this assumption. This in turn can help enterprises be more flexible with better managed inventory.

Highlights

  • Sustainability for today’s Enterprise largely depends upon the variety of products they can offer to their customers

  • Companies have to ensure that their Supply Chains are more agile, robust and flexible

  • When materials pass through the entire Supply Chain, the automated parameter settings can have cascading effects

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Summary

Introduction

Sustainability for today’s Enterprise largely depends upon the variety of products they can offer to their customers. Due to customer demands and competition, companies are forced to introduce new products and at the same time often reluctant to take decisions to discontinue obsolete items. This results in ever increasing range of product portfolio. Measures and checks are built in different functions of the Supply Chain. Because of these complexities companies are forced to ensure inventories are quantitatively and qualitatively (Torabi, Hatefi, Saleck, & Pay 2012) classified and managed. On one side customers are expecting more and more varieties of products and on the other side there is pressure on maintaining optimum levels of inventory for Finished Goods, Semi-Finished Goods and Raw Materials

Challenges in Efficient Planning
Unexpected Costs
Scheduling
Management of Surprises
Inventory Management
Assumptions in Inventory Classifications
Challenging the ‘Assumption’: Period for Data Analysis
Optimization thru Measure of Dispersion
Quantum of Dispersion
A Inference from Quantification
Findings
Conclusion

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