Modifying a System to Maximize Inventory-based Customer Service and ROI

That, in turn, would increase the level of customer service, and decrease inventory investment.

Other benefits of these changes include reduced purchasing efforts, rush orders, expediting, clearance sales and returns to vendors (for returnable items). And, warehouse space would be freed up, and less effort would be needed for receiving, put-away and counting; staffing might be reduced.

Here is an outline of some of the changes – which are all meant to function automatically, so little or no human intervention is needed.

  • Analyze order history data for unusual data that would distort inventory levels, and if a condition is within a pre-defined tolerance, adjust the data; if a condition is outside the tolerance, list the item on an action report.

  • Calculate safety stock based on target service level and the factors that can result in not having enough planned stock on hand when its needed.

  • Allow for trends when calculating lead time.

  • If the history data for an item is outside the tolerance, don't calculate safety stock or lead time or a forecast; list the item on an action report.

  • If the history data for an item contains too many gaps, don't calculate safety stock or lead time or a forecast; list the item on an action report.

  • Treat very slow moving items differently than items that move fast, but don't require human intervention – treat them automatically.

  • Let the system determine the most accurate method of forecasting.

  • The system can determine the most profitable service level.

  • Identify items for which the service level is too high.

  • Calculate the true cost of buying more than is needed now, vs. waiting and buying later.

  • Calculate whether a deal is too good to be true for the distributor (its always good for the supplier).

    ©2007 General Business Consultants, Inc.
    Dick Friedman is a recognized expert on information technology for foodservice distributors, but he does Not Sell systems. Based on more than 25 years of experience helping distributors, he has developed unique ways of managing inventory – ways that increase customer service and ROI. He is a contributing editor to ID Access, and consults with readers. Call his computer hotline (847 256-3260) for a free consultation, or visit his website (www.GenBusCon.com) for more information or to send e-mail.


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