Inventory waste is one of those age old problems that appears simple at first, but becomes vexingly complex upon closer analysis.
Maintenance and inventory managers generally agree that inventory waste should be eliminated to the greatest extent possible. Beyond that, there is broad disagreement, beginning with the definition of ‘waste’ itself.
For some companies, any inventory that sits on the shelf for more than a year or two represents an unacceptable expense. In a recent IMPO feature, consultants from Grainger, an industrial supply company, suggested that, on average, as much as half of the inventory that companies keep in stock is never used.
Other companies may struggle with the opposite problem: parts are coming off the shelves so quickly they can’t keep up the pace. As a result, they’re frequently left short-handed when equipment breaks down, which causes prolonged downtime, excess costs, and damage to customer relationships. In these cases, the waste comes in the form of higher prices paid for emergency part orders, lost business, and operational inefficiency.
Which scenario best characterizes your company? What is your inventory really costing you? If you’re not totally sure, you’re not alone. Many of our clients come to us looking to do a better job of tracking their inventory data for the purpose of answering questions like these.
Here are some steps you can take to find the answers you need and finally start to make inroads into the inventory waste problem. Continue reading