Inventory control is capitol control. Efficient supply chain methodologies must optimize simplicity and operational scalability within a competitive infrastructure.
Core Component Resources can guide your enterprise toward efficient control systems and enhanced cash flow.
Inventory control systems are either PUSH (sales-forecast ) or PULL ( demand ) driven methodologies.
PUSH SYSTEMS such as MRP are best implemented for products with small demand uncertainty where accurate forecasts exist or there is a high importance on economies of scale.
Advantages in a Push system include high stock levels to react to unexpected demand, optimum make to stock lot sizes, and production driven scheduling.
Disadvantages of a Push system include high inventory carry costs, potential for large scrap generation, rigid process discipline and high accuracy in forecasting.
PULL SYSTEMS such as JIT , Consignment or VMI are best implemented with large demand uncertainty and low economies of scale.
Advantages include minimized inventory carry costs, improvement in cash flow and customer driven make to order. Limited risk.
Disadvantages include high impact to set up costs, high stress levels and increased potential for customer delivery delays.
JIT – Just in Time – Purchasing signals the supplier that replenishment is necessary at the factory floor and the supplier immediately replenishes and invoices the customer from supplier control. Supplier makes and fulfills the empty bin within their control system.
VMI – Vendor Managed Inventory – Purchasing makes visible their existing stock levels and the supplier monitors and maintains a customer owned minimum-maximum level at the customer location. Supplier invoices customer upon shipment into customer location.
CONSIGNMENT – Supplier agrees to own and maintain inventory at the customers location. Purchasing signals the supplier that material will be drawn from consignment via purchase order, the customer assumes ownership of the material and is invoiced.
Let Core Component Resources guide you toward the best inventory strategy to minimize costs and maximize cash flow !