Inventory Management: The Nuts and Bolts

Agenda 8:30-8:45Session One: Introduction and Course Overview 8:45-9:00Icebreaker: Vegetable Garden 9:00-9:30Session Two: What is Inventory? 9:30-9:45Session Three: Types of Inventory 9:45-10:00Session Four: Key Players 10:00-11:30Session Five: Setting up the Warehouse 11:30-11:45Session Six: What Makes a Good Inventory Management System? 11:45-12:00Morning Wrap-Up 12:00-1:00Lunch 1:00-1:15Energizer: Egg, Chicken, Dinosaur 1:15-1:30Session Seven: The Warehouse Inventory Cycle 1:30-2:15Session Eight: Identifying Demand 2:15-2:30Break 2:30-2:45Session Nine: The Receiving Process 2:45-3:00Session Ten: Validating Inventory 3:00-3:15Session Eleven: The Put-Away Process 3:15-3:30Session Twelve: Maintaining Inventory Accuracy 3:30-4:00Session Thirteen: The Outbound Process 4:00-4:15Session Fourteen: Industry Trends 4:15-4:30Workshop Wrap-Up

Session One: Course Overview Understand terms that are frequently used in warehouse management Identify the goals and objectives of inventory management, and measure your process against these goals Calculate safety stock, reorder points, and order quantities Evaluate inventory management systems Identify the parts of the inventory cycle Better maintain inventory accuracy

Session Two: What is Inventory? Inventory is a catalogue or schedule of property of a person, organization or estate; hence an account of goods and their worth. Inventory management is the direction or control of goods and materials stocked by an organization to provide continuity of production and customer satisfaction.

Session Two: What is Inventory? Goals To manage and control inventory To carry appropriate stock levels To reduce inventory carrying costs To minimize stock-out costs To improve ordering costs To achieve & maintain stock accuracy Objectives 1.To effectively serve external and internal customers 2.To maximize the potential to generate revenue and limit costs from inventory transactions

Session Two: What is Inventory? Back-order Cross-Docking Distribution FIFO Lead Time LIFO Loading Logistics Order Packing Picking Product Number Put-away Receiving Re-order Point Returns Safety Stock Shipping Stock-Keeping Unit (SKU) Warehouse

Session Three: Types of Inventory Types of Inventory: Anticipation Inventories Fluctuation Inventories Lot Size Inventories Transportation Inventories Classes of Inventory: Raw materials and supplies to support production Work-in-progress items (WIP) Internal use only Promotional Finished goods Purchased products for resale and distribution

Session Four: Key Players Customer service means supplying requested information/goods/actions to meet the expectation of the requestor. We can’t supply the information/goods if they’re not in stock! One of your customers is top management. A well managed inventory can help reduce costs.

Session Four: Key Players The Hiring Process: Know the job you are hiring for. Know the knowledge, skills, and abilities required to do the job right. Have a job description for every position. If you take part in the interview process, be prepared for behavioral and situational questions. When the new employee arrives on the job, spend some time giving him/her an orientation to the workplace and the job, and create an opportunity to tell the new employee what you expect from him/her.

Session Four: Key Players Skills Checklist: Aptitude Common Sense Analytical Ability Ingenuity Decisiveness Assertiveness and Initiative Responsiveness Conscientious and Persistent Self-reliance and Flexibility Tact and Cooperation

Session Five: Setting up the Warehouse Maximize your storage (space or cube) utilization Maximize your warehouse equipment utilization Maximize your labor (employee) utilization Reduce your product handlings Maintain required product accessibility Assure the desired product rotation or turns Minimize your company’s operating expenses Assure the protection of your company’s assets

Session Five: Setting up the Warehouse Locations: Picking Replenishment Long term storage Location Identification: Facility Area Aisle Bay Position Level

Session Six: What Makes a Good Inventory Management System? Categorize product by class, group, use, or department Develop product item descriptions List vendors (existing or potential) Ability to establish estimated yearly usages Ability to establish lead times Set Safety Stock Levels Set Order Quantities Set Reorder Points Record receipts Record issues Record balance on hand and quantity available. Calculate number of turns per annum Establish average monthly use Establish maximum usage

Session Six: What Makes a Good Inventory Management System? Possible Computerized Systems Excel spreadsheets Access databases Tools available in existing software packages (such as accounting or contact management) Computer applications made specifically for inventory management Custom-made computer applications made specifically for a particular company’s inventory management system

Session Seven: The Warehouse Inventory Cycle

Session Eight: Identifying Demand Vilfredo Pareto: A: 20% of items = 80% of annual sales B: 30% of items = 15% of annual sales C: 50% of items = 5% of annual sales

Session Eight: Identifying Demand Order Quantity (No. of Mos. Supply desired x Avg. Usage) + difference Reorder Point (Avg. Mo. Usage x Lead Time in Mos.) + Safety Stock Safety Stock (Max. Monthly Usage – Avg. Monthly. Usage) x Lead Time in Mos.

Session Eight: Identifying Demand

Session Nine: The Receiving Process Consignor Consignee Purchase order number Item stock number Complete item description, including type, size, color, specification number, serial numbers, etc. Number of containers and number of units per container Total number of units received Number of units short or over The following information should be checked when receiving goods:

Session Ten: Validating Inventory There are three ways to validate inventory: 100 % accept method Random sample method 100% verification If quality is not met, what procedures should be taken?

Session Eleven: The Put-Away Process Consolidate like inventory. Minimize travel time. Ensure correct placement. Fulfill replenishments. Fulfill security requirements.

Session Twelve: Maintaining Inventory Accuracy Vilfredo Pareto: A: Tightest controls B: Moderate controls C: Simplest controls

Session Twelve: Maintaining Inventory Accuracy Scanning Devices Product Identification * UPC * VICS * License Plating Inventory Counting Methods * Random Counts * Cycle Counts * Fiscal Count

Session Thirteen: The Outbound Process Picking Process Packing Process Loading and Shipping Process

Session Fourteen: Industry Trends Cross-docking Third party warehousing Just-in-Time Completion Six Sigma Are there other trends you have been seeing?

Thank you