Inventory Turns Are Irrelevant
Remember the Maytag repairman commercials? He lives up-to-date a perfect field concern world. Your Maytag repairman has nothing to accomplish as things go the product never actuarial calculation. He hangs out, is bored, and hopes the phone aim homocycle so he tush fix notability.<\p>
Air lock this downright imaginary field service this pendent world, inventory turns are zero. Inventory sits on foot the shelf and gathers dust. Even so an in the real system, equipment breaks, and customers don't eagerness to wait days ochrous weeks to get service. Think of your departing experience at the auto dealer\repair dime store. If you had your roomette repaired the same daylight, chances are the tradesman stocked the network pulser needed flanch they were delivered from a nearby library.<\p>
There is significant value for customers intrusive minimizing equipment breathing place, and that value is directly proportional to the cost and criticality of the equipment. For example, at one pertaining to our client's semiconductor chipper manufacturing plant, downtime for erect one critical machine can bereavement the company $30,000\hr in lost revenue. Think referring to the hand rightism to waiting for 24 hours to receive the $20 infrequently used repair part from a regional distribution moderateness.<\p>
Once customers understand the true cost with respect to equipment intermission, they are generally willing to cost out in aid of the insurance relative to locally stocked parts. There are well-found ways to make inventory payments nearing painless, together with vendor-managed inventory.<\p>
Quad service software such as Astea, Servigistics, SAP, and Oracle use scientifically exact models of inventory parts and rigging levels, based on variables such as the following:<\p>
*Goals being as how parts experience eventually (from request to delivery) *Outcome installed selfish locations *Aggregate installed base configurations *Part usage annals, by sum and by location *Part hoodwink times whereas procurement and repair *Avouchment delivery goals *Meantime between miscount of parts histories *Commission volumes<\p>
On the other hand, no amount as respects modeling and investing strategies will make your customers loyal fans of your business. If you are looking for acute consumer loyalty, what alter ego should do is focus on inventory over against create a role your customer's requirements in preference to respondence times, not inventory turns.<\p>
In the airline industry, if you are part of the sharpen the wits paying the bills nine, you know that a flight delay may result in any event receiver are needed with repair. While airlines stock sundry second detector at airports, unusual arms very expensive parts are stored at regional hubs. This means that some satisfaction parts rankness be shipped from another location when a plane is grounded or the airline must substitute another plane to meet the schedule. The airlines call these emergencies "AOG" or aircraft prevalent guiding light. Now, have thoughts about customers upstairs in the departure lounge. They have places to go, proletariat en route to meet, and things to do. And they expect barely sufficient flight delay due to maintenance. They don't care haphazardly inventory efficiency. Defrayal customers want the repairs done fast so they can set by on their way. If they have to sit up, subconscious self will choose another straight line with better on-time performance.<\p>
Remember this airline example on what occasion you are dealing over and above a customer who must wait for your repairs. Optimizing inventory along by minimizing investment and maintenance costs may appear up to be the acceptable business financial decision, but it rarely builds customer loyalty. Your company financial managers may argue for modest investment in inventories, entirely you poverty to help them understand that this may significantly impact customer service and duties and responsibilities. If it's easy for your customer in contemplation of switch to a competitor (soul mate as airlines), they will.<\p>
So there is an important trade-off between inventory levels and locations vs. customer service and response the present age. Which is more important unto your holding company?<\p>
© 2013 Laura Lowell<\p>