Inventory Benchmarking and Optimization
Factory Physics' Inventory Benchmarking and Optimization is a very powerful approach for determining:
- Your improvement opportunities for reducing inventory investment and increasing customer service. (Benchmarking)
- Optimal inventory policies for your best combination of inventory investment and customer service. (Optimization)
In the illustration of efficient frontier curves above, each one of the points on each curve (red, blue, or green) are optimal solutions for inventory policy depending on what combination of inventory investment and service level you choose. The curves are generated using our CSUITE software. Getting the optimal inventory policy for ALL 1635 parts is as easy as clicking on one of the points. The different curves represent different numbers of purchase orders if analyzing raw materials. If analyzing finished goods parts, the curves represent different numbers of setups in production. In many cases, these curves all lie on top of each other. This identifies an opportunity to decrease the number of setups (for finished goods) or decrease the number of purchase orders (for raw materials) and still get the same result. This is very powerful for helping manage personnel and machine capacity.
Selecting a point on one of the curves will provide optimal policies (Reorder Points and Reorder Quantities or Days of Supply and Safety Stock) for you to use with your existing MRP or ERP system. Benchmarking and optimization provides a quick and easy approach for you to understand where you are versus where you could be. With an understanding of practical Factory Physics concepts, the CSUITE Inventory Optimizer makes a powerful tool for getting truly Lean or for getting the most out of your existing ERP system. Contact us to get a demonstration of this very practical, powerful approach.
Click here to download a more detailed inventory benchmarking case study.
Click here to go to Lean Physics for Managers seminar webpage.