Inventory Management in Manufacturing - Slow & Plain English
What you'll learn
- Inventory Definition & Type of Inventory by Use
- Inventory Classification and relevance to Planning & Execution
- Evolution of Material planning: Context
- Quantity based Planning methods (EOQ, POQ, VIsual etc)
- Demand based Planning methods (TPOP & MRP)
- Lot Sizing Techniques
- Safety Stock Techniques
- Inventory Valuation
- Inventory Accuracy
- Inventory Performance Measurement
- Any Fresher is welcome as this is a course on fundamentals.
- Basic knowledge of how Manufacturing works is a plus
- Understanding of Bill of Material and Routing is required
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 :
7 sections • 26 lectures • 2h 52m total length
Introduction: Context of Planning in Manufacturing & Supply Chain2 lectures • 11min
Inventory Definition and context
Major drivers of Inventory Management
Types of Inventory7 lectures • 20min
Work in progress (WIP) 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
Time Phased Order Point (TPOP): Introduction and how it works
Material requirement planning (MRP)
Lot Sizing Techniques (5 lectures • 41min
Lot Sizing Techniques overview
Demand Rate Oriented Lot Sizing Techniques
Discrete Lot Sizing Techniques
Safety Stock Techniques (13 lectures • 44 min
Safety Stock Considerations (importance)
Demand Variations: Mean Absolute Deviation (MAD)
Demand Variations: Standard Deviation (SD)
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
Inventory Valuation Techniques (8 lectures • 51 min)
Ways of establishing Inventory holding
Inventory Valuation techniques
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
Inventory Performance Measurement (7 lectures • 27 min)
Inventory Performance Measurement: Section Contents
Importance of Inventory Performance Measurement
Inventory Turnover Rate (ITR)
Customer Service Level
Other Inventory Performance Metrics
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.
Who this course is for:
- Freshers aspiring for careers in Manufacturing, Supply Chain and Inventory Management
- Aspirants of certifications in domains of Production & Inventory Management and Supply Chain management may find it useful
- Students experienced in Manufacturing industry in Non-Production and Planning departments
- Students educated in Production & Industrial engineering or other such disciplines
- ERP consultants who want to learn the basics of Manufacturing and Planning domain
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