Inventory Management – Health Check / Inventory Management / MNP.ca

Business Processes - Part 1

1. What does your ideal inventory level look like? Is it:

20-30% lower

30-40% lower

50% lower

We need more inventory, we are missing shipments because we don't have the right inventory at the right time.

2. Is there a regularly updated sales forecast created? Is there a plan in place to manage variations (both up and down) compared to the forecast?

Yes, we have a sales forecast in place, and we monitor variations compared to it.

Yes, we have a sales forecast in place, but it is not monitored versus actuals until the end of quarter / year.

No, we don't have a sales forecast in place, but we have a general idea of our expected sales.

No, we don't have a sales forecast; we don't need one.

3. Are there frequent (at least yearly) negotiations with your suppliers regarding contracts and / or price points?

Yes, we have frequent negotiations with our suppliers to ensure we are optimizing price buckets for our top SKU's.

Yes, we have negotiations with suppliers frequently, but they are not SKU specific.

No, we don't have frequent negotiations with suppliers, and only discuss price when the contracts expire.

No, we don't have negotiations with suppliers; we have limited control and negotiation power.

4. Are there frequent SKU rationalizations performed to identify under-performing SKU's?

Yes, we do formal analysis frequently to track and evaluate the performance of our SKU's.

Yes, we perform formal SKU rationalizations, but they are infrequent, time consuming and manual.

No, we don't perform formal SKU rationalizations but have a general idea of our best and worst-performing SKU's.

No, we don't perform formal SKU rationalization, we don't have the in-house expertise or the time.

Business Processes - Part 2

5. How long does it take to perform inventory counts? How many resources are needed? How frequently do they occur?

Inventory counts are quick, the whole warehousing team comes together, and they follow a structured, well-developed, process.

Inventory counts take time and a lot of resources to complete. We dread doing them and as such, they happen infrequently.

Inventory counts take a ton of time, the entire company needs to get involved and it seems as though each year we are following a different process.

Inventory counts rarely, if ever, occur. If they do, it's because there is a large discrepancy in our systems.

6. Is there structure to your SKU nomenclature and SKU descriptions? In other words, do your SKU's follow a set alpha-numeric scheme that allows for future growth and variability?

Yes, our SKU nomenclature and descriptions are standardized, tell a story, and we have a lot of room for future growth.

Yes, we have set SKU nomenclature and descriptions, but we often find we must go outside of the legend to add new SKU's.

Yes, we are supposed to, but it is difficult to find and name any SKU in a consistent manner.

No, we just follow a count, and every SKU is added when it is acquired.

7. Are there any ABC analysis performed regularly on your suppliers, customers, or SKU base?

Yes, we regularly perform ABC analysis on our suppliers, customers, and our SKU base. We use these insights to rationalize our SKU offerings and our vendor choosing.

Yes, we perform ABC analysis, but it is not regular and only on our SKU base.

No, we don't perform ABC analysis.

No, we don't know what an ABC analysis is.

8. Is there a calculated safety stock for each SKU? Do you find you often run out of key products?

Yes, we have calculated, dynamic, safety stock and we rarely run out of key products.

Yes, we have calculated safety stock, but it is static, we sometimes run out of key products.

Yes, we have safety stock, but it is not formalized or calculated and is estimated. We often run out of key products.

No, we have no safety stock calculation and order as needed. We often cannot fulfill orders immediately.

9. Are there processes in place to control the purchasing habits of your replenishment professionals?

Yes, we have standardized replenishment formulas and approval procedures across all replenishment professionals.

Yes, we have processes in place to control purchasing habits, but each replenishment professional has a different method of ordering making it hard to control.

No, we do not have processes in place to control purchasing habits beyond threshold levels that require approval.

No, we do not have nor need processes to control purchasing habits. Our replenishment professionals have years of experience and operate with little oversight.

Management Systems - Part 1

10. Are the current inventory management practices:

Agile - can react to short-term demand fluctuations?
Adaptable - ability to adjust the supply chain to meet structural shifts in the market easily?
Aligned - has alignment on strategic vision, goals, and targets across all levels of the organization?

They are agile, adaptable and aligned.

They are two of the three options.

They are one of the three options.

They are none of the three options.

11. Is there a strategic procurement plan in place, such as a defined strategy surrounding inventory purchasing including pricing, supplier management, and procurement personnel organizational structure?

Yes, we have a strategic procurement plan in place, and it is followed and continuously monitored.

Yes, we have a strategic procurement plan in place, but it is not followed or monitored.

No, we do not have a formalized strategic procurement plan in place, but we do have some general strategy.

No, we do not know how to craft a strategic procurement plan let alone implement it.

12. Are there any in-depth supply chain data analytic capabilities around profit reporting, price analysis, supplier analysis, and customer analysis?

Yes, we have in-depth data analytic capabilities for our supply chain and are constantly identifying ways to improve it.

Yes, we have some data analytic capabilities, but we believe there is more we can pull out and analyze.

Yes, we have some data analytic capabilities, but it is very basic and helps us execute the work and not improve on the strategy.

No, we don't have data analytic capabilities in house.

Management Systems - Part 2

13. Are there set ROP's and ROQ's across all your SKU's? Are these driven by mathematical minimum and maximum calculations, or more robust replenishment formulas?

Yes, there are automatically calculated and dynamic ROP's and ROQ's across all our SKU's and the replenishment formula is dynamic and robust.

Yes, there are ROP's and ROQ’s, but they are driven by minimum and maximum calculations.

No, there are no set ROP's and ROQ’s, but we do have basic calculations for replenishing inventory.

No, we order inventory as it is needed.

14. Are there strategic targets for your turn-to-earn and GMROI ratios?

Yes, they align with strategic goals and are continuously reviewed and automatically updated.

Yes, we have targets for turn-to-earn and GMROI ratios, but they are not updated frequently.

No, we don’t have targets for turn-to-earn or GMROI ratios.

No, we are not sure how to implement these ratios or what the benefit would be.

15. Do you know how much inventory is obsolete, in surplus, or under stocked?

Yes, we have a strong understanding of our surplus and obsolete inventory and frequently review the SKUs to improve movement.

Yes, we have a general understanding of our obsolete inventory but not a great understanding of our surplus inventory.

No, we don't have an understanding of what products are nearing obsoletion or SKUs in an overstock scenario.

No, we don't have an understanding of surplus or obsolete inventory and are unsure how to track it.

16. Do you track performance of SKU's where demand cannot be met and thus sales are limited? Are there plans in place to increase stock to improve sales?

Yes, we have a strong understanding of which SKU's we are underdelivering on and have plans in place to improve sales.

Yes, we have a general understanding, but it is more based on gut feeling or salesperson response.

No, we don't know how much additional revenue we are missing out on by not meeting full demand.

No, we do not need to track as we always have enough inventory in stock.

Other

17. Would your company benefit from employee training? If so, what kind of impact would this have on your bottom line?

No impact.

5% profitability improvement.

10% profitability improvement.

Greater than 10% profitability improvement, plus intangible benefits (ability to scale, improved quality and customer service, improved onboarding).

18. What is your biggest inhibitor to growth and profitability?

Information

First name *

Last name *

Email *

Phone

City/Town *

Company *

Role *

If you have an MNP advisor, what is their name?

Yes, send me news, insights and promotional materials by email. I understand that I may unsubscribe at any time.

* Required

Inventory Management – Health Check