Reviewing the Inventory Management for a Leading Carbon Black Manufacturer
The client was among the top three producers of carbon black in the country. Client’s top management believed that though their ‘B’ and ‘C’ class items amount to a small percentage of the value of purchases, the number of transactions for such items were too many and the pre-order process, including activities such as vendor selection, definition of stocking and reorder norms, etc. needed to be reviewed.
The client requested UC to assist in carrying out the review of inventory management.
To run a diagnostic on the inventory management practices within the client’s organisation, UC adopted the following approach:
- Conducted ABC analysis for all ‘B’ and ‘C’ class items
- Identified all the slow and non moving items
- Analysed existing inventory norms and defined parameters to establish inventory norms:
1) Stocking norms
2) Safety levels
3) Reorder levels
4) Economic order quantity
5) Order points
- Identified key process issues
- Defined vendor selection parameters
- Listed and prioritized implementation initiatives such as tasks, responsibility and indicative time frames
The client received a streamlined inventory management for ‘B’ and ‘C’ class items and reduced transaction cost.