review, and slow moving and obsolete stock start coming up in every single
meeting…it´s pretty much inevitable; inaccurate forecasts, undersells,
overstocks, there can be hundreds of reasons why a sku become a slow moving,
and we might explore in deep some of them in future posts, but whatever the
reason is, when inventory doesn’t move, the business will incur in associated
carrying costs and lose of valuable resources that could be used to invest in
Defining what is “slow moving” is not easy as the criteria will vary from
company to company, and what is considered slow moving from some retailers
might not be for others, but there is a general rule that can be applied to
most companies to define if a reference is slow moving or not; Having stock
worth 6 or more months of demand for any given item will indicate that this
particular sku is a slow moving.
Now we know
what slow moving is, we can focus on the impact that slow moving stock has in
our business. From an outside perspective, you can think that slow moving stock
shouldn´t be the focus of an organization as “it only has a negative effect on our
inventory”, but if we dig a little bit further, we will realize that the impact
of slow moving stock affects a business in ways that we never thought about before.
Interest paid on borrowed money. When
inventory doesn't sell, you are incurring more interest charges.
Insurancecosts derived of inventory on hand.
provisions;financial reserve to cover losses,
Storage spaceof course.
incurred when your warehouse is full of slow moving inventory; outside storage
costs, build of new facilities, movement of stock from one picking location to
of destruction of obsolete stock.
Depreciation of the inventory month after month.
personnel, including managers, stock keepers, material handlers, cycle counters,
planners and controllers.
These are only some of the aspects in which
slow moving stock has an impact, therefore the sooner you tackle the “slow
movers” the more profitable your business will be.
In future posts I will try to extend this topic
and underline the causes and also possible solutions to slow moving inventory.
Today I will let those other important things in life have their space in this blog. Because life is not about setting barriers but overcoming them, is not about holding a burden but releasing it, is not about doing what you should do or what everybody else expect you to do, but doing what makes you happy...
And if you are lucky enought to have a job you love, a caring family and a good bunch of friends......there is not much else you can ask for!
Terms like “Retail supply chain”, “Automotive
supply chain” or “FMCG supply chain” have become widely popular, but there is
not such a thing as a “specific” supply chain, there are basically two
categories, and almost all supply chain processes fall into one of these two
categories. All of the above industries fall under Pull or Push supply chain. In
fairness, a hybrid new model called “Push-Pull” is being accepted as a third
valid model but understanding the pull and the push models separately will make very
intuitive the Push-Pull model.
What is Pull Supply Chain?
Under pull supply chain, products are manufactured based on specific
customer requests, in fact, companies only make enough product to fulfill customer's orders. We also know it as “Make to Order” model
(click here to learn more). We often see this model operating in High Tech
Industries, where customization is the competitive advantage. Briefly, we have
seen this model in automotive industry and it is being used in high end luxury
market segment. The objective of this model is to minimize the Inventory and
optimize supply. One advantage of the Pull system is that there will be no excess of inventory that needs
to be stored, thus reducing inventory levels and the cost of carrying and
storing goods. However, one
major disadvantage is that it is highly possible to run out of product and not
being able to supply the merchandise on time, leaving the company unable to fulfill the order which contributes to
What is Push Supply Chain?
Under Push model, products are
manufactured based on anticipated customer orders. Companies must predict which
products customers will purchase and determine what quantity of goods will be purchased.
This model is also known as Make to Sock. The core assumption of push programs
is that demand can be anticipated and that it is more efficient and reliable to
mobilize resources in pre-specified ways to serve this demand. Some
disadvantages of the Push model could include high inventory costs and huge warehousing
and distribution costs, plus the fact that forecast are often inaccurate and
sales can be unpredictable. An advantage of the push system is that the company
is fairly assured it will have enough product on hand to fulfill customer’s
Retailers heavily use push model but for
some time now the big names in the retail industry are trying to adopt the
hybrid Push-Pull model which is a combination of pull and push models.
Some companies have come up with a
strategy they call the push-pull control system, which combines the best of
both the push and pull strategies. Push-pull is also known as lean inventory
strategy. The goal is the reduction of product shortages which can cause
customers to go elsewhere to make their purchases.
From birth to
death, we are all part of the healthcare system; we rely on hospitals, doctors,
nurses etc to provide preventive care and to treat our illnesses. Healthcare is
perhaps one of the most important indicators of quality of life and longevity
in a society.
consumes an increasing percentage of our economic product. This rising cost can
be attributed in part to the increase of life expectancy and to the expense of new treatments, but also it can be attributed to inefficiencies
in healthcare delivery.
represents one of the most challenging aspects of the healthcare system. When
the system works well, patients flow at a steady path, moving efficiently
through the stages of care, and every stage is completed with minimal delay, however,
when the system is broken, patients
accumulate meaning the patients suffer considerable queuing delays.
unique features that make queueing problems particularly difficult to solve:
create additional work for clinicians. Patients must be
monitored and served while waiting, and their conditions can deteriorate,
necessitating additional work once they get to be treated. Thus, as queues
become large, the workload increases and the capacity to serve patients deteriorate.
- It can be difficult to distinguish
productive waiting from unproductive waiting. In a traditional
queueing system the most desirable outcome is instantaneous service, however, in
a hospital, it is undesirable to reduce the length of stay to zero, as patients
need to be monitored and cared during recovery periods. This can result in conflicting
objectives in managing hospital beds when trying to separate productive waiting
(recovery) from unproductive waiting (waiting for tests).
At hospitals, care
is provided through many specialized departments, therefore when a patient
arrives at the emergency department encounters repeated waits as he or she
progresses from stage to stage, waiting for rooms, equipment, physicians,
nurses, technicians, beds, records, gurneys and so forth. When the system
becomes overloaded, the patient may wait hours or even days from being seen in
the emergency department until being given the ok.
We can summarize
the three major causes of queues in hospitals:
- Idle capacity due to a failure
to synchronize resources (ensuring that technicians, nurses, physicians,
patients, etc are present at the same time).
- Inadequate communication
to ensure the relevant departments are prepared to receive patients from other areas.
- Inefficient processes that require more work than necessary or un-needed
repetition of work.
Some reasons that will lead to patients waiting for
placement in a hospital are can be other patients waiting too long to complete
the discharge process, beds remaining idle too long from when a patient departs
until the bed is prepared for the next patient, poor communication between the
emergency department and the ward, a shortage of technicians, or even because
there is an inadequate number of gurneys to transport patients etc.
Working on improving patient flow at hospitals will
not only save money but also will save lives.
Have you ever wondered how much of the money you pay for the bunch of bananas you just purchased at the supermarket is due to supply chain costs? Do you know where the food you eat come from? Are you aware of the plights small farmers and producers face to compete against the giant food corporations? These are some of the questions that Pete Russell dissect during his speech.
Worth watching, to understand how local food businesses can actually work, and what´s even more important can be fair to every single link of the supply chain.