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Branch news : Midlands - Inventory Optimisation - Demand management Article
The article entitled: "Branch news : Midlands - Inventory Optimisation" is in the Demand management Articles section of Operations Management Papers area...
ARTICLE DESCRIPTION: Professor Hendrick Vanmaele of Mobius provided a very interesting and stimulation presentation on Inventory Optimisation. Thought by many to be a black art, the Professor brought considered science to this significant business issue.
MORE INFO: Branch news : Midlands - Inventory Optimisation Professor Hendrick Vanmaele of Mobius provided a very interesting and stimulation presentation on Inventory Optimisation. Thought by many to be a black art, the Professor brought considered science to this significant business issue. The presentation initially outlined the role of demand and inventory within any business showing how difficult it is to manage. Hendrick then discussed the issues relating to Demand Management and how different forecasting approaches are essential to manage the differing business environment. The discussion then moved on to the complexities that exist in inventory management and, in particular, the existence of the trade-off between delivering high service levels and tying up significant capital in inventory investment. The presentation then outlined the particular approach developed by Professor Vanmaele in the development of his ICAP/M - Optimisation tool and method. The ICAP/M approach goes well beyond the simple ABC classification that most companies consider and classifies inventory by its demand type. For example, what I understood to be Runners were broken down into New, Positive Trend and Fast, whereas Repeaters were divided into Erratic, Negative Trend and Lumpy and finally the Strangers were Slow, Dying and Obsolete, which also successfully maps to the traditional product life cycle. The approach then advocates the use of different forecasting approaches and stocking policies for each group to ensure optimisation is achieved. The Professor described how successful projects follow a simple four step plan, which is first the analysis of the inventory, second the design of an inventory policy, third preparation for the implementation of the policy and concludes with the implementation and maintenance of the desired inventory policy. The presentation concluded with some interesting concepts to answer the ‘stock or not to stock that is the question’. The approach used a business criticality matrix to compare the customers’ frequency of ordering and customers’ order value profile to determine a business case approach to the marginal - stock/non stock question. The presentation stimulated some lively debate on the issue of inventory optimisation and did run over time, but that merely goes to show how time flies if you’re enjoying yourself. Our thanks go to Professor Hendrik Vanmaele and his colleague Paul Lambert for preparing such an informative presentation, as well as to the members and non-members who turned up to make the evening a useful learning experience, as well as a opportunity to network with likeminded inventory geeks. Geoff Relph, FIOM Inventory Matters
PUBLISHER: Institute of Operations Management
Page number: 8 Word count: 400
Vol 31 - No 07 - November/December 2005
The article can be downloaded in full from the publisher's site i.e. the Institute of Operations Management.
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