10 Questions that Take the Pulse of a Company´s Inventory Health

  1. Are you able to break down your operating inventory into the three major categories when reporting levels-safety, replenishment and excess or obsolete stock?
  2. Is your company using the most effective method to calculate your safety stock levels?
  3. Do you recalculate safety stock levels on a regular basis to ensure they are up to date?
  4. Who decides key inventory-related policy such as striking the right balance between customer service and cost-effective product inventory levels?
  5. Who determines the optimal frequency for producing or ordering products?
  6. How do you determine the frequency for ordering and inventory production if it’s not set solely by factories or the supply organization?
  7. Is the optimal order or production frequency calculated on a regular basis as part of a continuous improvement process?
  8. Do you have regular visibility into excess and obsolete stock, and is it linked to targeted action plans to sell off or reduce this inventory?
  9. Do you perform root-cause analyses on excess and obsolete stock and know how they are linked to action plans that curb more excesses from being created?
  10. Do you apply the above practices to all parts of your inventory (finished goods, raw material, works in process and spare parts) and in all organizational entities?

Source: Ten ways to improve inventory management by Ronald Fink, Pratap Mukharji, Sam Israelit, Francois Faelli, Thierry Catfolis, Raymond Tsang | Bain & Company, WSJ.com

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