
In this lesson the context of Inventory management is provided. Following the context, the Inventory definition is made.
We already agreed it is not possible to run an organization without inventory and inventory management. Apart from managing the material required for your own organization's consumption, You will have to store a few raw materials and finished materials as minimum to meet the customer requests.
You also appreciate that inventory management goes by a few policies and guidelines on how much inventory to be maintained, how much to order when fulfilment is required, how much accuracy is needed and how Inventory is valuated etc.
There are several business drivers which influence the inventory management policies. You will run through major drivers of inventory management in this lesson.
In this lesson, you will briefly run through multiple manufacturing environment before discussing list of Inventory types based on the way the inventory is used. The reason for covering basics of prominent manufacturing environments is to relate the way inventory policies are impacted by these environments such as Make to Stock, Make to Order, Assemble to Order, Project Manufacturing and Process Manufacturing etc.
Multiple types of Inventory according to the usage and the accounting principles are discussed briefly.
Major types of inventory such as Raw Material / Component Parts, Work in Progress, Semi-Finished Goods, Finished Goods, Cosigned Stock and MRO are briefed with examples.
A few other types of inventory such as Excess Inventory, Obsolete Inventory and Non-Conforming Inventory; which do not fall in traditional inventory classification are also discussed.
Inventory type Raw Material is explained in terms of definition, the way this type of material is planned, handled and fulfilled in multiple manufacturing environments.
Inventory type Semi-Finished Material is explained in terms of definition, the way this type of material is planned, handled and fulfilled in multiple manufacturing environments.
Inventory type Worki-in-Progress Material is explained in terms of definition, the way this type of material is planned, handled and fulfilled in multiple manufacturing environments.
Inventory type Finished Material is explained in terms of definition, the way this type of material is planned, handled and fulfilled in multiple manufacturing environments.
In this lesson a special type of Inventory Consigned Inventory is explained. Consigned inventory model is in fact a practice rather than any specific Inventory type. In fact Consigned inventory can be finished material or semi-finished material. Because there is a special type of handling and using this type of inventory, this topic is included under the section Inventory types.
MRO inventory is special type of inventory which is planned stored and used in different way. Some of these types of MRO inventories are raw materials and semi-finished materials of your product but they are not planned for meeting sales of finished materials. Instead, these types are used for After sales and Maintenance purpose.
There are a few types of Inventory which are handled differently due to the very purpose for which they are stored aside and used separately.
Inventory classification based on value and Consumption pattern is explained in this lesson. These classifications provide the inputs and guidelines to determine the Inventory policies according to the classification. For example, ABC classification guides you on where to have stringent inventory policies and where the policies can be a bit relaxing. A class items have top priority in Valuation, Inventory accuracy, Planning, Sales Strategy, Storage policies etc. Similarly Slow moving Items have different priorities compared to Fast moving items.
Before explaining various types of Inventory review and Fulfilment methods, a typical Fulfilment cycle is illustrated for initial understanding. In this illustration, most basic order review method (Re-Order point) and Fulfilment policy of ordering to make the inventory to Maximum (Min-Max Order Quantity) are taken as examples. In this lesson apart from getting idea on Inventory fulfilment cycle, a few key terms such as Supply Lead Time, Order Point, Quantity to Order (Lot size). Lead Time consumption etc are also introduced.
While we understood the typical and ideal Order Fulfilment process, we face a few uncertainties in real life. Success of your regular fulfilment cycle has a few dependencies. With reference to the earlier lesson when basic Order fulfilment is explained, this lesson provides some insight on key dependencies for success and a few possible uncertainties during Order Fulfilment.
With better understanding on Order Fulfilment cycle, it's uncertainties as well as dependencies for successful fulfilment, you may not get a clear understanding on all important terms involved in Order Fulfilment Cycle.
In this lesson we revisit the context of Course section Order Review methods in terms of basic Order Fulfilment cycle, challenges involved due to uncertainties and need to handle the dependencies. With the acknowledgement of all important terms involved in the Order Cycle, we conclude the Section.
Order Point method is probably the first order review method adopted with many unreal assumptions such as stable demand, accurate supply for fulfilment and accurate consumption rate of inventory etc. But this formed the basis for slow evolution of Planning methods for Inventory review and Fulfilment. In this lesson Order point method is explained with a couple of illustrations
Periodic review system is enhanced Order point method covering a few setbacks.
Hybrid review systems are combination of Order point and Periodic Review methods taking best out of each method. In this lesson two such Hybrid Inventory review methods are explained.
There are many visual based review systems for Inventory tracking and fulfilment. 4 such visual review systems are explained with graphical illustrations where applicable.
The Section on Quantity based Order Review methods is concluded after summarizing the understanding.
Lot Sizing is a very important aspect in a Manufacturing and even a trading Industry. Proper lot sizing is an important factor to help supply chain efficiencies and improvement of economies. This lesson covers the definition of Lot sizing and course contents.
Lot Size and Lot Size definitions
Groups of Lot Sizing techniques
List of Lot Sizing techniques under each group and briefing.
Demand Rate Oriented Lot Sizing techniques are discussed in this lesson.
Fixed Order Quantity method and Economic Order Quantity are briefed.
Cost Components of Ordering and Inventory carrying costs are discussed with examples where applicable.
A few calculations are explained through examples.
* The Course has subtitles in English, Afrikaan, Italian, Simplified Chinese, Spanish and Japanese
In a Manufacturing Industry, you will be using multiple types of materials to make and sell your Products. Each type of material according to it's use, will have to be planned for fulfillment, storage, usage in Manufacturing and selling the main products. Various types of material such as Raw material, Finished material, sub-assembly or semi-finished material and MRO etc are to be handled in different ways in terms of planning, storing, valuations and managing their inventories.
Hence planning of materials for making and selling product and planning of the product (finished items) themselves needed multiple levels of strategy to ensure you keep the customer satisfied and at the same time, keep your financial parameters in control.
You hence needed to understand the functions of multiple types of inventories to determine the kind of controls you want to apply. Understanding on various types of materials helps in that aspect. In addition, the special classifications such as ABC Analysis can consolidate the kind of material that need maximum attention and those that can have relatively loose controls. In other words ABC classification helps you determine the level of Inventory Policies and controls to apply on specific group of Items
The planning of the materials was quite preliminary before 1960's. Those days, the planning was just reactive on the basis of inventory stock levels. the review of stocks was also done only on basis of stock level of each item without any consideration on dependencies among the items handled in your organization. For example, you plan laminations, Wood and bolts at individual levels without acknowledging that all of them together may be required to make a piece of furniture such as Table, Chair etc. The assumption made in these reactive inventory planning methods were not at all close to real business scenarios. Hence planning used to fail many times. Or to avoid the risks you might be purchasing huge quantities of materials. in both cases the results will lead to financial losses in terms of loss of customers or loss of investment due to huge inventory costs.
The evolution planning to more and more matured levels was from the basic order point system to Time phased order point (which looked at timing of order in addition to tracking stock levels) and Material requirement planning - MRP (which in addition to TPOP way of working, added the "Kit based planning". There are a few more enhancements to the planning that included Constraint based planning . You also have another concept of reaching NO INVENTORY state, in what is called Just in Time - JIT environment by removing all inefficiencies causing the need to hold inventories.
The course will cover the above aspects in a structured form.
You start with Inventory definition and appreciate the need to perform inventory management.
After that you will run through a few popular Inventory types and how they are handled in relation to manufacturing environment.
You will than go through Inventory classification based on which the level of control to be applied on each class of the inventory is determined.
The context of how planning is evolved over a period of time is briefed after covering the inventory aspects in above sets of lessons
A few quantity or stock based order review methods (such as Re-Order Point, Period Order Quantity , Two Bin System etc) are introduced.
This set of lessons is followed by a few Demand based order review methods which included TPOP - Time phased Order point method and most comprehensive planning method - MRP as well.
Popular Lot sizing techniques are explained with relevant illustrations for most of the methods. While explaining the Selection factors for each techniques, some influencing factors are briefed.
You may want to know how Safety Stock is planned and calculated to handle unforeseen demand. One section Safety stock calculations will provide insight on demand analysis, demand variations and safety stock calculations.
Section on Inventory Valuation has lessons explaining the post popular accounting techniques for Inventory, such as LIFO, FIFO, Standard Costing, Average Costing and Process costing etc. You will go through example valuations for most of these methods.
With understanding that all your planning and calculations need accuracy of inputs such as Inventory data, the section Inventory accuracy provides fair understanding on Inventory accuracy and important Inventory counting and correction methods such as Physical or Annual Inventory, Cycle Counting and combinations. For each method, sample counting techniques, report analysis are explained through an example scenario.
Finally you need to know how is your Inventory Management Performance. Lessons in this section explain the performance metrics that directly or indirectly reflect the Inventory Management performance. The metrics such as Inventory turnover ratio provide indirect measure of sales and delivery performance, whereas other metrics such as Customer service directly reflect the performance of sales and Manufacturing. You will go through many examples and calculations in this section as well.
The Course is associated with a Practice KIT of 75 Questions and answers along with explanation for each of the Questions in the Kit. These explanations themselves act as additional notes for the students benefit when they prepare for Certifications in space of Production and Inventory Management and Supply Chain Practice etc.
The curriculum in details is :
Course content
7 sections • 26 lectures • 2h 52m total length
Introduction: Context of Planning in Manufacturing & Supply Chain2 lectures • 11min
Inventory Definition and context
Preview
Major drivers of Inventory Management
Types of Inventory7 lectures • 20min
Raw Materials
Semi-Finished Material
Work in progress (WIP) Materials
Finished Materials
Consigned Materials
Maintenance, Repair and Operational supply Materials
Special types (Excess Inventory, Obsolete, Non-Confirmed Material )
Inventory Classification2 lectures • 6min
Inventory Classifications on basis of Multiple factors
Classification Based on Value and Consumption rates (ABC, Fast-Slow Moving etc)
Section 1 Recap and Summary1 lecture • 2min
Recap and Summary
Order Review and Planning Methods: Context5 lectures • 21min
Context (Evolution of Planning Over a period)
Illustration of a typical Order Fulfilment Cycle
Dependencies and Uncertainties in planning
Key terminology in Order fulfilment
Section Recap and Summary
Stock based Material review methods6 lectures • 18min
Context and Agenda
Order Point based Review method
Periodic Review System
Hybrid Review System (Combination of Order Point and Periodic Review)
Visual Review based Order methods
Section Recap and Conclusions
Demand and Stock based Review Systems (TPOP and MRP)5 lectures • 37min
Context
Time Phased Order Point (TPOP): Introduction and how it works
TPOP Illustrations
TPOP Characteristics
Material requirement planning (MRP)
Lot Sizing Techniques (5 lectures • 41min
Section Agenda
Lot Sizing Techniques overview
Demand Rate Oriented Lot Sizing Techniques
Discrete Lot Sizing Techniques
Section Recap
Safety Stock Techniques (13 lectures • 44 min
Section Ahenda
Safety Stock Considerations (importance)
Demand Analysis
Demand Variations
Demand Variations: Mean Absolute Deviation (MAD)
Demand Variations: Standard Deviation (SD)
Tracking Signal
Safety Stock calculations -Brief
Safety Stock Calculations-Statistical
Safety Stock Calculations - Time Period Based
Safety Stock Calculations - Safety Lead time
Safety Stock Calculations -Some Key Notes
Conclusion
Inventory Valuation Techniques (8 lectures • 51 min)
Context
Ways of establishing Inventory holding
Inventory Valuation techniques
FIFO
LIFO
Standard Costing
Average Costing
Process Costing
Section Recap
Inventory Accuracy (30 Lectures - 97 min)
Inventory Accuracy - Introduction and Section Content
Inventory Accuracy - Importance of Inventory Accuracy
Inventory Accuracy - Prerequisites
Inventory Accuracy PI - Physical Inventory (Annual Inventory)
Inventory Accuracy - Physical Inventory
Inventory Accuracy - Physical Inventory : Process
Inventory Accuracy -Physical Inventory : Examples
Inventory Accuracy - Physical Inventory: Pros and Cons
Inventory Accuracy CT- Cycle Counting
Cycle Counting - Snapshot of Cycle Counting
Cycle Counting - ABC Class based Counting Process
Cycle Counting - Pros and Cons
Cycle Counting - Other Approaches
Cycle Counting - Samples and Examples
Cycle Counting: Example of ABC Analysis
Cycle Counting - Sample Cycle Count Sheet
Cycle Counting: Sample Cycle Count report evaluation
Inventory Accuracy - Conclusion
Recap
References
Inventory Performance Measurement (7 lectures • 27 min)
Inventory Performance Measurement: Section Contents
Importance of Inventory Performance Measurement
Inventory Turnover Rate (ITR)
Customer Service Level
Inventory Accuracy
Other Inventory Performance Metrics
Conclusion
The course included a few quiz sections to help the students refresh their understanding.
This course helps many students who are aspiring for certifications in the domains of Production & Inventory Management, Supply Chain Management or any other subject relevant to this topic.
We want to make a clear disclaimer that we are not associated with organization that provide certifications in the relevant domains.