Rightsizing of the inventory has always shown an ability, despite initial misconceptions from workgroups external to MRO supply chains, to achieve desirable outcomes of diverse stakeholders. In order to gain buy-in from these workgroups, it’s important to understand what might motivate them to be part of the MRO Inventory Optimization process in the first place. Here are several motivating factors:
Maintenance Motivators:
- Increased protection against maintenance delays through unavailable inventory items.
- Hold enough inventory to cover unforeseen/unplanned demand.
- Hold enough inventory to reduce the requirement for long-term planning on long lead time items.
- Don’t waste my time with convoluted processes with little benefit to me!
Finance Motivators
- Reduction of capital tied up in inventory.
- Reduction in overheads’ relation to purchase and storage of inventory.
- Reduced need for write-off provisions of obsolete inventory.
Supply Chain Motivators
- Management of storage space in warehouses and yards.
- Reduced receipting effort in warehouse.
- Provide optimal service level to customers.
- Improved supplier delivery performance and total cost of ownership savings against performance based contracts
It’s easy to see that some of the motivators can complement one another; but there can also be conflicting motivators. For example, one motivator requires more inventory by an individual, whereas another motivator requires less inventory by the organization to control costs. The question then becomes can we satisfy the two conflicting motivators? The answer is yes.
Using MRO analytics we can right-size the inventory and apply increases and decreases to suit the business’s needs. An inventory that has not undertaken an optimization process will almost always achieve a trend down in inventory value and an increase in service level once the optimization process is commenced. Part two of this blog will discuss how to best structure your inventory review process to engage the right stakeholders in the right way.
Watch our two-minute video to learn more about what Intelligent MRO can do you for you.
