Inventory Optimization for Supply Chain Planning Hands-On Workshop

SCM Process - Overview of Demand/Supply planning –

•  Overview of Demand/supply and MPS Process
• Production Strategies
• Key objectives of supply chain management – Customer demand fulfillment
• S&OP as the key driver of monthly planning process
• Inventory impact on functional Stakeholders
• Why Forecast and Plan?
• The Service – Cost – Balance Model
• Introduction to Demand Planning- What, Why and How?

 Introduction to Inventory Management Principles – Why carry inventory?

•  Inventory Categories - Direct materials - Indirect Materials - MRO OEM  - MRO Industrial
•  Purpose of Inventory - Buffering - Hedging - Decoupling 
• Inventory Strategies -  Make to Order    -  Make to Stock -  Build to Order/ Mass    customization  Postponement - Engineer to Order

Product Segmentation and ABC analysis –

• SKU Segmentation for inventory strategies ABC analysis – Classification philosophy Pareto analysis of SKU’s based on dollar usage Item Criticality as a factor of Sales Service and Lead time Frequency of Usage Excess, Obsolete and Slowmoving Alignment with the product lifecycle  
• Discontinuance and end of life (EOL), as appropriate
• Process flow for segmenting SKU's using the above  techniques   - Example using a three-dimensional matrix;     ABC / Volume / Critical / Status: excess, obsolete        Impact of Segmentation on Cycle Counting and Inventory accuracy

Measurement and KPIs Forecast Error, Customer Service and Inventories.

• Service Level measurements    - Fill-Rate and On-time Delivery - Order complete      
• Service Metrics exercise
• Inventory Performance Measures - Inventory Accuracy - Inventory Turns - Days on Hand
• Forecast accuracy - MAPE, MAD, MPE, and RMSE  - Calculation exercise
• Supplier Performance Measures - Schedule Adherence  - Lead Time Adherence
• Relationship between Schedule Adherence, Customer Service and Inventory Availability 

Digital Supply Chain and its impact on Inventory Management

• Supply Chain Tower & Improved end to end visibility
• AI-driven Dashboards for real-time alerts
• E-commerce and e-inventory management
• Automation in inventory management
• Big data to comb through key SCM triggers

Economic Order Quantity and Purchase Quantity Discounts

• Principles of Inventory management
• Economic Order Quantity
• Derivation of the EOQ
• Determinants of EOQ
• Ordering Costs versus Carrying Costs
• Components of Inventory carrying/holding costs – capital, storage, obsolescence, handling (breakdown) and their impact
• Estimating Inventory Carrying costs for various industries
• Purchase Quantity Discount

Exercise:  Deciding to take a Purchase Quantity Discount 

Inventory Optimization and Management- Safety Stock

• Independent Demand Item Reordering
• Safety Stock calculations
• Determinants of Safety Stock – Service Level Agreement, Demand Volatility and Lead Time
• Effect of Demand Uncertainty in Safety Stock – Different Scenarios
• The perils of variability in Supplier lead time
• Supplier Lead time Variance
• Effect of Supplier Uncertainty on Safety Stock Calculations

Exercise: Service percent effect on Safety Stock

Inventory Optimization and Management- Min Max Models

• Re-order Point
• Demand During Lead Time
• Definition of MIN level in the Min-Max Model
• Definition of MAX level in the Min-Max Models
• Inventory Cycle and Cycle Time 
• Cycle Stock
• Time phased Order Point (TPOP)
• Lifetime buys and Minimum Buys

Case Exercise: On Safety Stock, Min-Max, and Reorder Point. 

 Work-site Inventory Management Techniques

• Challenges and Benefits of improving & maintaining inventory Accuracy
• Periodic review process vs. Perpetual Inventory
• Cycle counting vs. Physical Inventory
• Kanban systems
• Kanban Methodology
• Determining Container Size and Quantity
• Safety stock, Min-Max, and DDLT in Kanbans.

Exercise:  Kanban Calculation exercise