Periodic  inventory review

Inventory is  reviewed  at a fixed  period say 3months or every month .This review helps in
management  to know about  order size and also high lights the slow moving and dead inventory .

Tight  management  of usage rates ,lead times  and safety stock

This allows  the firm  to make  sure inventory control  is kept  at the appropriate  level .Such an
inventory control  process helps to identify consumption pattern and eleminate high inventory.

Reduce  safety  stock

This  can be accomplished  by focusing on lead time of  stock items .

Introduce  or  Enhance  cycle  counting  practice

This  replaces the  conventional process of taking stock  annually .Physical inventory  is counted
several  times in a year .

ABC approach

In this strategy , items are classified  into three categories
Class A , Class B , Class C

Class A typically  account for  about 80% of annual sales and represent about 20% of inventory.As it
accounts  for major part of the business  a high frequency of review would have to be developed .

Class B account for nearly 15% of  annual sales  while Class C account for 5% of sales .

Shift more inventory or inventory ownership to suppliers  and  Quantitative approaches has to be in
system to ensure balance between inventory holding and ordering costs .

Next - cost  of inventory


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