How to use Inventory Efficiency results?
The Results worksheet has all the information to analyse your inventory. These are examples on how to use it.
Most weighted parts
Sort the Results worksheet by Weight within the Maximum Inventory Needed in decreasing order. You have at the top the most important references and their weight within the Maximum Inventory Needed (not your current inventory). These references need to be under control and have the lowest efficiency.
If you want to reduce your Maximum Inventory Needed, these are the references that you have to first consider to increase the delivery frequency, decrease MOQ or production batch size... but it could be costly.
Potential savings
Input an Efficiency objective at 100% and sort the worksheet by Savings in currency by being at 100% in decreasing order. Total savings in currency shows you what you can save by just managing correctly your inventory. The worksheet shows the list of references on which you need to work in priority (see Pareto).
Red list
Keep 100% for your Efficiency objective and sort by Extra days of inventory to be at 100% decreasing. Start to create a red list: parts which cannot be ordered and received for x days.
Example:
If you calculate your Inventory Efficiency every week just after the MPS, you add a filter to the values of the Extra days of inventory to be at 100% column to be higher than 7 days and you add to the column Number of deliveries to be cancelled a condition to select values higher than 1. You will get a red list.
Dead stock
Select the number of consumption periods that you want to consider as the consumption horizon. On the column Parts with a demand during the next xx weeks, select blank values. You get the list of parts which will be not consummed during your consumption horizon.
Retardant
For parts managed with VRO, the spreadsheet calculate the retardant value when it can be applied. This VRO parameter represents the number of times you can to decrease the delivery frequency and decrease the average inventory value. 2 retardant values are calculated:
- one due to the MOQ;
- one due to the Production Batch size;
Calculation is done when they are higher than the demand between 2 deliveries.
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