This will be the first of several blog postings of InventorySux - a theme many planners are familiar with. If you have too much, you are over ordering. If you have too little, you are not ordering enough. In other words, "you're damned if you do and damned if you don't".
There is very little room for a planner to make mistakes. A real simple rule of thumb to help planners is to break their items into one of the three inventory states: overstocked, under stocked, or balanced. Planners should try to maintain 60-80% of their inventory in the balanced state, whilst the balance should contribute toward the under stocked and overstocked state.
Maintaining and reporting inventory in these states is a great first step to creating an actionable, drill-down dashboard. Workflow and focus should be on those items contributing most to the overstock and under stock states, thereby improving your productivity and balancing the inventory for the items you manage.
Unfortunately for planners, management typically looks and tracks inventory at the level of responsibility a planner is responsible for, which is then compared to corporate-wide top-down financials. And, by the law of large numbers the overstocked items end up balancing the under stocked when looking at the inventory from a top-down perspective. The true breakdown of inventory by state is lost, along with your true performance. However, by proactively breaking your items into their respective states and working the outliers, the overall result on inventory will still reflect upon you positively.
In our next segment of InventorySux, we will discuss correct inventory reporting.