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Inventory Efficiency

A low cost tool for inventory reduction

To reduce inventory, we always think about revamping our current Supply Chain organization (reduce batch sizes, increase delivery frequencies) which is generally costly and takes time.

What is the level of stock needed?

By analyzing the daily level of your inventory, you are going to discover what is useless, at least for regular operations. In this example, if we consider the incident out of scope of the study (because it is exceptional and unpredictable), inventory till the red level can be eliminated. We can even consider it useless till its orange level if we accept an overcost. For example, we can accelerate the flow with an express transportation to get sooner the missing quantity or maybe set-up production during off-shift hours. The Inventory Efficiency Tool is helping you to analyze this extra inventory, to find its origins and levers in order to reduce it.

Inventory Efficiency is the ratio between your current inventory value and the maximum inventory value required for your Supply Chain organization to run.

An Inventory Efficiency of 165% means that you can reduce by 65% your inventory by better using your current organization without putting customer deliveries at risk.

You can measure Inventory Efficiency by supplier, type of parts, production line... and see immediately what are the main gaps between the actual situation and what you really need.

Inventory Efficiency helps you to easily detect inventory reduction opportunities and highlight the right factors/processes to be corrected.

Inventory Efficiency Tool Excel spreadsheet to calculate Inventory Efficiency.

How to use Inventory Efficiency results? Standard analysis to highlight main levers of inventory reduction.

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