Inventory Basics

Agenda
Elements of Supply Chain
Inventory An element of Logistics
Inventory in Logistics - Relevance
Inventory Financial Impact
Warehouse Types
General Inventory Terms
Warehouse Performance Parameters
Material Handling Equipments
Warehouse Operations
Warehouse Support Services

Elements of a Supply Chain

PRODUCTION
PROCURMENT

LOGISTICS

DISTRIBUTION

SCM Process Footprint

From a process perspective the supply chain can be viewed as set of
processes used to produce and deliver goods and services to
customers
SUPPLIER

Supply chain design

Demand forecasting

SUPPLY CHAIN
PLAN

SOURCE

MAKE

CUSTOMER

DELIVER

Planning

Product Life Cycle Management

Procurement
Sourcing

Manufacturing Flexibility
Production Management
Manufacturing Flow
Management

Order Fulfillment
Warehouse Management
Inventory Management
Transportation management

Inventory An Element of Logistics

Warehouse A link in the logistics chain

Warehouse / Store-room / Stock-room/ Depot Traditionally

a building for storage of goods

Inventory in Logistics - Relevance

Cost of Operating a Value Chain

w. Campus. Queens.edu/faculty/ houchinc/ppt/BK12e_Ch13_basic.ppt

Inventory Financial Impact

Number
Type
Locatio
n

Changing Warehousing Paradigms

Todays
Warehousing
Warehousing
Earlier

Fewer SKUs

Few Large Orders

Warehouses

Smaller Manual

Stocking points

Distribution Centers
Larger No. of SKUs
Multiple Smaller Orders
Large Automated
Expansion of Product

Operations

Lines

Limited Product

Lines

Localized operations

Global Sourcing and

distribution

Todays
Challenges

Increased Operational
Complexity & Need for
value added services

Dynamic Location
Assignment & Space
Optimization

Increased handling &

picking complexity

IT enabled & globally

scalable systems &
processes

Inventory Burgeoning Growth

We consume more

We demand more variety

We demand availability right here right now

Lead times are lengthening the China syndrome so, more stock,
more safety stock .

More to handle and store even with declining inventory/sales ratio

Complexity Operational Factors

Just-in-Time Delivery
Improve the speed of
warehouse operations
Integrate operations to
reduce order processing
time
Inbound

One Size Fits One

SKU proliferation
Mixed Pallets
Shorter product life
cycles
Labeling compliance

Guaranteed Availability
OTIF
Inventory Visibility
Fines for non compliance
Internal
Processin
g

Outboun
d

Lowest Total Cost

OTIF at low cost
Improve labor efficiency

Inventory Storage Echelon Based

Warehouse Layout

Buildings
Yard
Area
Zones
Locations
Receiving Staging Areas
Put away Areas
Processing Areas
Picking Areas
Replenishment Areas
Receiving Areas
Shipping Areas

Warehouse Types Straight/ through Flow

Warehouse Types Inverted T Flow

Pallet Storage
& retrieval
Systems
Put Away
Receiving

Material
Handlin
g
Cross
Docking

Case
Picking
Systems

Broken
Case
Picking
System
s

Sortation
Unitizing & Shipping

Warehouse Types U or Cross Flow

Warehouse Types Corner Flow

Warehouse Types Modular Flow Based

General Inventory Terms

ASN (Advance Shipment Notification)

AS/RS (Automatic Storage/Retrieval System)
Batch Picking
BOL (Bill of Lading)
Carrier
Cross Docking
ABC (Activity Based Costing)
Cycle Counts
Order Lead Time
Parcel Manifest System
Put-Away
Random-Location Storage
Wave Picking
Aging
Blind Receiving

General Inventory Terms

Back Order
BOM (Bill of Material)
Audit Count
Adjustments
Consolidation
Slotting
Safety Stock/Buffer Stock
Forward Pick Location
Fill Rate
FTL/LTL
FIFO/LIFO/FEFO/LEFO
Kitting/De-kitting
KPIs
LPN (License Plate Number)

WH Performance Parameters

Stock Turnover Ratio

Warehouse Cost to Sales Ratio.

Warehouse Cost per unit

handled

Occupancy rate of warehouse

space

Material Handling Equipments

Manual
Semi Automated
Automated
Fork Lifts
Transport Units
RF Terminals
Conveyor
Pick to Light
RF Tags
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Transport Units

Tote Box

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Pallet

Fork Lifts

Manual Stacker

25

Semi
Automated

Fork lifts in Use

Conveyor

RF Terminals

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RF Tag

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RF Tag

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Warehouse Racks

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WAREHOUSING
OPERATIONS

Operations in warehouse

Inbound Operations

ASN / PO / JO / TRTV
Goods Receipt Note GRN
Putaway Generation & Confirmation

Advanced Shipment Notice

What is ASN ?
Copy of Purchase Order
Job Order Job to be carried by warehouse to receive materials.
Move Order Transfer Order from other warehouses
TRTV Order To be Returned To Vendor Reverse Logistics
Cross dock , Back-Orders

Why ASN ?
For better planning on receiving more volume and handling time.
To reduce TAT Truck turn Around Time
How it is captured ?
Details of Orders will be sent by mail, fax or print and same will be
entered manually in system for execution.
EDI - Downloaded from Order Management system, CRM , VRM
GRN gets generated upon ASN

Good Receipt Note - GRN

What is GRN ?
Goods Receipt Note Confirmation of receipt
Why GRN ?
Acknowledgement for receiving to be given to delivery team, manually.
Time and Date of Receiving for performance analysis.
Outbound shipments can be better managed.
Back order can be reduced
How it is captured ?
Copy of ASN will be printed and cross checked with received qty. Then
entered manually with discrepancy if any like Shortage/Excess/Damaged
Same can be verified and updated using RF terminals.

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Putaway gets generated uopn GRN confirmation.

Put-away

What is Putaway ?
Putaway is an operation which directs the inbound team to place the
received goods in locations inside warehouse.
Why Putaway ?
Putaway guides to place the goods in particular location.
Updates the inventory upon confirmation.
Inventory serial Numbers get generated for internal tracking purpose .
Shelf life of the product will be decided from putaway confirmation date.
How it is confirmed ?
Putaway can be confirmed in system or thro RF terminals

Inventory gets updated upon Putaway confirmation.

Put-away Proposal Strategy

Fixed Locations
Flexi Locations
Near fixed Locations
Add to existing stock
Next empty Location
Bulk storage

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Outbound Operations

SO / JO / MO / RTV
Order Picking
Picking Confirmation
Packing
Loading & Despatch

Outbound Operations Order Release

What is an Order & Order Release?
An Outbound instruction to despatch certain amount of item to a Customer/Vendor.
Order Relase is an process which suggest the Picking team to pick goods from specific
location with fixed quantity.
Types of Order ?
SO Sales Order , JO Job Order , Move Order Stock Transfer
RTV Return to Vendor
Order release based on ?
Customer Delivery window.
Transportation cutoff time.
Agreed time lines.
What does Order Release Does ?
Allocates the stock/quantity for released orders.
Generates pickticket

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Pick Ticket gets generated upon Order Release.

Unit of Measurement

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Pick list / Ticket Generation

What is a Picklist?
A list which contains which item to be picked from specific location with
required quantity.
Types of Pick List ?
Loose Pick
Full Pick
Bulk Pick
Inventory Allocation?
Inventory allocation happens based on Stock Removal /Stock Rotation
logic.

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Picking Types
Basic Order Picking
Batch Picking Orders Grouped in small orders / Consolidated Pick List.
Zone Picking Picklist will be generated zone wise and issued to picker.
Wave Picking - Combination of Batch & Zone Picking

Stock Rotation
FIFO , FEFO , LIFO ,FMFO
Partial Quantites / Large Quantites

Picking Methods
RF Pick
Paper Based pick
Pick to Light

Packing
RF or Manual
Shippable Pallet not repacked.
Grouping product wise.

Loading & Despatch

Delivery Documents to be prepared
Loading base on route schedule.
Loading confirmed by RF or system.

POD Proof of Delivery

POD on Handheld devices
Thro CRM or SRM/VRM
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Warehouse Support
Services

Capabilities

QC Checking
Pallet Labeling
Consolidation & Break bulk
Cross Docking
Postponement
Stock Piling
Kitting

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QC Checking

Receiving Quantity
against order placed.
Checking for damages
while transportation DOA
Sample testing.

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Pallet Labeling

Stock Piling

A stockpile is a pile or storage location for bulk materials, forming

part of the bulk materials handling process.
Stockpiles are used in many different areas, such as in a port,
refinery or manufacturing facility. The stockpile is normally created
by a stacker. A reclaimer is used to recover the material.
Stockpiles are normally stacked in stockyards in refineries, ports
and mine sites.
A simple stockpile is formed by machinery dumping coal into a
pile, either from dump trucks, pushed into heaps with bulldozers
or from conveyor booms.

Kitting

Kitting is the process of

forming kits either for
production or for dispatch
A kitting list is prepared for
the inventory which are to be
used to form a kit
Warehouse personnel forms
the kits based on kit lists

Cross Docking

It is the Process of receiving and dispatching goods across docks

Storage of goods is only at the staging area or sometimes even
no storage
Mostly Used for products with shorter shelf life.

Cross Docking

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Postponing

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Postponement is a systematic approach to designing and

developing standard, configurable products that can be
differentiated, quickly and inexpensively, once actual customer
demand is known. This model allows organizations to transition
from a 'push'-oriented supply chain to a 'pull' or a demand-driven
supply chain.
Postponement is not a new concept.
Holding Inventory in a less finished state that is , postponing final
product assembly unit until actual customer demand is known
Market opportunities and offer greater customization options .
High degree of collaboration and visibility across the supply chain.

Inventory Management

Inventory Management
Analysis
Vendor Managed Inventory / Consignment Stock
Replenishment
Cycle count , Stock Count
JIT / Kanban

Inventory Analysis

Analysis refers to an assessment of the viability, stability and profitability of a business.

To continue or Discontiue its main operation or part of its business.
Make or Purchase of certain materials in the manufacture of its product.
Analysis / Classification

Criteria

Uses

ABC

Annual

Ord qty decision

VED

Criticality

Safety stock of spares

FSN

Movement

Disposal Decision

XYZ

Stock Value

Disposal Decision , stock verification

Vendor Managed Inventory - VMI

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Consignment Stock

- Consignment Inventory is inventory that is in the possession of the customer, but

is
still owned by the Supplier/Vendor .
- Consignment stock is legally owned by one party, but held by another.
- Ownership of consignment stock is passed only when the stock is used (issued). Unused
stock in a warehouse may be returned to the manufacturer.

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Inventory Accuracy

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Cycle Count

Why to Count ? And

Frequency of
Counts ?

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Stock Count

Why to Count ? And

Frequency of Counts ?

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Replenishment

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An Inventory system in which a

minimum quantity and
maximum quantity are set for
an item. When the quantity
drops below Min you order up to
the Max or to quantity
configured.
Internal Replenishment
External Replenishment
Replenishment is the process
of filling the picking locations

JIT / KANBAN
Just In Time is an inventory
strategy implemented to
improve the return on
investment of a business by
reducing in-process inventory
and its associated costs. The
process is driven by a series of
signals, which can be Kanban
Quick communication of the
indicator.
consumption of old stock which
triggers New stock to be
ordered is key to JIT and
inventory reduction. This saves
warehouse space and costs.

Thank You