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Date posted: October 21, 2015

How a manufacturing organization handles inventory management has a direct bearing on its likelihood of success. Do it well, and it can depend on having the materials it needs on hand when it needs them; do it poorly, and significant problems ensue.

To have the right products at the right place at the right time, retailers put a lot of time, thought and effort into inventory management, allocation, and replenishment processes. of their business process, then purchase the inventory and allocate it stores from a distribution center (DC). When inventory runs low at a particular store, the DC replenishes it. That’s the idea.

An article on Predictive Analytics Times speaks to how inventory distortion can derail the idea, and how predictive analytics are working to keep them on track.

Inventory distortion is a term used by retail technologies consultant IHL Group to describe the challenges faced in the typical inventory management process. Examples of what causes this would include:

  • When products don’t sell well at specific stores, retailers are forced to markdown inventory in order to clear the inventory.
  • When there is no more inventories in the DC, or even before inventory is replenished, retailers experience lost sales at stores where these products are still in demand.
  • Customers resolve to purchase from a local competitor in order to fulfill the sale.
  • Lost sales paint an inaccurate picture of lower demand, which in turns makes a retailer order and allocate less inventory to stores in the future. (This cycle repeats itself.)

According to IHL Group, inventory distortion costs retailers nearly $800 billion globally. Increasingly, notes the article, retailers are fighting this by using predictive analytics for inter-store inventory balancing:
In order to properly forecast demand, and build the optimal inventory management strategy a retail solution must be tailored to the specific business process of the retailer, which means that it must take all factors that affect demand into account. Predictive analytics technology will significantly improve demand forecast accuracy, and suggest better allocation and replenishment strategies. Moreover, there are specific tools that enable a retailer to further decrease inventory distortion. One such tool is inter-store inventory balancing.

Inter-store inventory balancing leverages predictive analytics to proactively analyze all the influencing factors of a retail supply chain, then recommends an optimal inter-store transfer schedule to move slow-selling products to stores where there is a higher demand for them. Retailers that use predictive analytics for this technique report significant benefits, with tangible results such as:

  • A 25-40% decrease in inventory costs
  • Sales increases of up to 20%
  • Increasing turnover by a factor of up to 3.5x

This is just one way retailers are leveraging predictive analytics, but one that’s indicative of why its use in inventory management is destined to grow.





Date posted: October 20, 2015

“Few things are harder to put up with than the annoyance of a good example.”

—Mark Twain

Case studies continue to be a mainstay of the work I do. During the past 25 years, I’ve written more than 500 case studies. (Honestly, that number is probably low. I stopped counting a decade ago after reaching 350.)

At Aprilaire, their legacy system was outdated, expensive to update, and didn’t provide easy integration of work orders and preventive maintenance activities, or fast, easy access to information/reports. When they began working with FacilityDude, the company enjoyed better visibility across maintenance operations; ease of use and simple report generation; and significant time and labor savings.

The power of the case study is evergreen for good reason. Case studies are a potent marketing tool.

Date posted: October 19, 2015

How a manufacturing organization handles inventory management has a direct bearing on its likelihood of success. Do it well, and it can depend on having the materials it needs on hand when it needs them; do it poorly, and significant problems ensue.

Brookfield, MA-based TLC Group posted five top best practices for inventory management on its Knowledge Center blog; they’re worth another look:

  1. Categorize inventory
    Portions of your inventory will move faster than others and, therefore, require a different management approach. Indeed, the 80-20 rule applies to the items you stock, so it’s a good idea to categorize inventory and set priorities accordingly. For example, you might want to make sure you have a bigger stock buffer for your fastest moving items. Slower moving items may call for less security. This best practices inventory management approach is sometimes referred to as ABC analysis. Sales numbers are often associated with ABC analysis, but profitability is another way to prioritize.
  2. Focus on demand forecasting
    A company’s demand fluctuates due to seasonality, economic climate and other business trends. A solid forecasting capability can help you plan inventory and maintain appropriate levels, avoiding excess inventory or shortages. Companies can study past sales trends to determine likely future patterns and align inventory management policies to reflect those expected patterns. But there are other techniques to consider (e.g., qualitative assessment and the time series method).
  3. Apply automation
    In particular, smaller manufacturing companies may track inventory via multiple spreadsheets and lack a unified view of stocking levels. A centralized inventory management system, a module included in many ERP products, provides a way to keep accurate inventory counts, deal with unexpected events, avoid overstock situations and boost inventory efficiency. An ERP suite can also automate such tasks as demand forecasting and ABC analysis. Such systems represent the systems side of best practices for inventory management.
  4. Look for underlying problems
    Those who overlook history are bound to repeat it— this holds true for inventory management. If you find that a certain item is perpetually in oversupply, get to the heart of the matter. Consider performing root-cause analysis on excess and obsolete stock and understanding how those stocks are connected to action plans for combating future excesses.
  5. Consider alternative inventory models
    Inventory management covers an array of models, so it makes sense to evaluate new approaches from time to time. If your organization finds it difficult to keep tabs on a certain item, approaches such as vendor-managed inventory (VMI) can help you share the burden.

      Are you employing these practices? Others? We’d love to know what approaches you are taking to ensure efficient inventory management.


Date posted: October 14, 2015

As a company grows, so too does the challenge of its fixed asset management.

A recent column on Wasp Buzz points to five best practices for fixed asset management that prove useful in protecting asset value and minimizing the stress on administrative staff responsible for this function.

  1. Always use the best tools for the job.
    Take a critical look at the software being used: legacy systems may be counterproductive. Using the best tools will save time and money. The software needs to be scalable as well as reliable. Your asset management system must have the ability to grow with your company; otherwise, you may find yourself in the awkward and delicate condition of having to move between asset tracking systems— at considerable cost.
  2. Ensure accurate depreciation tracking.
    Without accurate tracking of asset depreciation, companies pay too much for both taxes and insurance. Ideally, asset management software should ensure accurate calculation of depreciation as long as purchasing information is accurate. A further concern here— failing to depreciate assets appropriately could lead to violations in regulatory compliance. (This especially so for companies that work with government funds or grants.)
  3. Start your tracking out right.
    Establish a solid and accurate baseline. If you begin with inaccurate numbers, your numbers will always be inaccurate. Never trust an old system. Go back to the physical inventory of your items to ensure they have all been cataloged and that they have been cataloged correctly. Part of this involves removing “ghost assets,” assets that still exist on the books but are no longer company property. These may emerge if an asset has been broken, stolen, or even sold but not properly recorded in your books due to improper tracking, system shortcomings, or less than diligent procedures.
  4. Streamline hardware and software.
    When managing fixed assets, both the correct hardware and software are needed, and the two need to be well integrated. They should work well in tandem without any compatibility issues.
  1. Customize your fixed asset reporting.
    Too often, companies rely on generic, boilerplate reports for fixed asset reporting. A schedule of fixed assets should be tailored both to a company and its industry; otherwise, it may prove difficult to glean relevant and important information for effective fixed asset management.

Remember, if fixed assets comprise the bulk of an organization’s capital base, they must capitalize on them to drive competitive advantage. This should help the focus on fixed asset management best practices.


Date posted: October 12, 2015

The global reliability and maintenance management consultant IDCON has posted in their resource library a series of seven questions to help in checking best practices for preventive maintenance. They’re worth reviewing here.

  1. Do you have a definition for preventive maintenance (PM)?
    Ask people in maintenance and operations to define what is included in preventive maintenance. Those companies employing best practices will have a definition of preventive maintenance that is documented, understood, and well communicated across the plant.
  2. Do you know how satisfactory PM is done today?
    Ask the plant manager, maintenance manager, and operations manager for the PM improvement plan. If there is one, is it specific with timelines? When best practices are employed, plant management is aware of strengths and weaknesses of the PM program. The plant therefore has specific plans and timelines in place for improvement actions.
  3. Do you have an alignment standard, and is it followed?
    Ask for an alignment standard and check the quality of the standard. Go look at equipment for signs of good or poor alignment. When best practices are followed, there is a well-documented alignment standard; more importantly, the standard is followed. In a world-class reliability and maintenance organization, all alignments are done to 0.002 in. (0.05 mm) for equipment running below 3600 rpm and 0.001 in. (0.025 mm) for equipment running above 3600 rpm. There is a well-defined alignment standard explaining how to set up, clean, check for pipe strain, check for soft foot, and so on.
  4. Do you have a lubrication standard, and is it followed?
    The standard should include storage, handling, filtering, and cleanliness of lubricants. Storage and handling areas should be visually checked for cleanliness. When best practices are employed, there is a well-documented lubrication standard— one that is followed. The cleanliness standard for each piece of equipment should match the clearances in the equipment’s lubricated surfaces. Further, in order to reach the right cleanliness levels of lubricants, oil and grease have to be stored, handled, and filtered correctly.
  5. Are inspections (condition monitoring) done where it is cost-effective to do so?
    Go through inspection lists, check for the level of detail, and make sure the route is actually completed. When best practices are employed, there are inspection routes for all mechanical, electrical, and instrumentation equipment (where it is cost effective to have inspections). In a top-notch plant, inspections are documented and completed according to schedule. The plant is using an inspection list or a handheld computer. The list or handheld computer describes exactly what to do for each inspection. The inspections are a combination of measuring condition and subjective (i.e., look, listen, feel, smell) inspections.
  6. Is detailed cleaning of equipment done well?
    Take a walk in your plant and visually check the cleanliness and condition of the equipment.  If best practices are employed, detailed cleaning of equipment is done consistently. Dirty areas are redesigned in order to protect equipment from contamination. Detailed cleaning can be checked easily. For example, a clean hydraulic unit can be inspected for leaks in about 10 seconds by taking a quick look at the pan underneath the hydraulic unit. A dirty hydraulic unit would take 20-30 minutes to check for leaks.
  7. Is an ultrasonic or vibration monitor used when greasing bearings?
    Check lubricators’ equipment. If best practices are used, vibration or ultrasonic levels are checked while greasing in order to apply the correct amount of grease.