OMSAN LOJİSTİK

Key Performance Indicators & Inventory Benchmarking Inventory Planning and Management Latin America Logistics Center Logistics Management Series -

Key Performance Indicators

Key Performance Indicators in Inventory Management Financial Inventory Carrying Cost (ICC) Inventory Carrying Cost on Sales (% ICC/Sales) Average Inventory Value (AIV) Inventory as % of Sales Return on Investment (ROI) Return on Investment per Category Productivity Inventory Turnover Rate (ITR) SKUs per Person Purchase orders per hour Quality Forecasting Accuracy Inventory Accuracy Fill Rate % Perfect Orders Response Time Purchase Order Cycle

Financial Indicators Inventory Carrying Cost (ICC) Inventory Carrying Cost on Sales Average Inventory Value (AIV) Inventory as % of Sales Return on Investment (ROI) Return on Investment per Category

Inventory Carrying Cost (ICC) Is the addition of all costs for holding inventary ICC = %ICR x AIV Is calculated multiplying the Inventory Carrying Rate by the Average Inventory Value

Inventory Carrying Rate Ranges from 15% to 45% Opportunity Cost of Capital Shareholders Expected Return on Investment = ROI = 25% Warehousing = 4% Loses = 2-5% Damages Evaporation Obsolescence: Out of Date, Packaging changes Insurance, Taxes = ?

Inventory as a % of Sales

Return on Inventory Invesment (ROI) Company A Company B Sales $ 1,000,000.00 $ 1,000,000.00 Profit $ 200,000.00 $ 200,000.00 Average Inventory Value $ 400,000.00 $ 800,000.00 Return on Inventory 50% 25% Return on Inventory Investment = Turnover/Average Inventory Value Which Company would you Prefer?

Inventory Management per Category Financial Performance Indicators Traditional Management Gross Margin per SKU ROI Category Gross Margin per Supplier Profitability Accountability ROI Subcategory Subcategory GM ROI per Supplier Category GM ROI per SKU Category Management

Total Cost Inventory Management

Productivity Indicators Inventory Management Inventory Turnover Productivity of People in Inventory Management and Planning

Inventory Turnover Rate (ITR)

The Logictics ScorebordTM Costs – Sales Inventory Rates

Inventory at Polaroid’s European Subsidiaries

Inventory Turnover per Industry Source: Robert Morris Associates

Spare Parts Industry Inventory Turnover Analysis 6 5.8 5.5 5.5 5.3 5.1 5 5 4.8 4.6 4.6 4.5 4.3 4.3 4 4 3.7 Inventory Turns 3.5 3 2.5 2.3 2 1.5 Equipos de Alta Tecnología Computers Electronics Computers ECU Electronics Semiconductors Telecommunications Electronics Parts Special Machinery Aircraft Parts Aircraft Engines & Motor Vehicle Parts Japan Electronics Parts Industry Category

Inventory Turnover Benchmark per Industry

Inventory Profile Analysis (IPA) An agregate technique that compares Current Inventory with Target Inventory per SKU. Coverage (%) = Current Inventory Compared to Target ( 0 to 100%) Excess (%) = Anything Above Target ( no limits ) Ejemplo Target are 10 apples and 10 oranges Current = 5 apples y 15 oranges Coverage = 75% (5 apples + 10 oranges = 15/20 x 100) Excess = 25% (5 oranges = 5/20 x 100) IPA = 75 - 25 % IPA = 75 - 25 %, i.e. High risks of stockouts and waste or one quarter of resources!

Inventory Quality Indicators Inventory Quality Rate (IQR) % Forecasting Accuracy % Inventory Accuracy % Fill Rate % Perfect Orders

Forecasting Accuracy Indicators Absolute Deviation Algebraic Deviation Mean Average Deviation (MAD) Mean Aboslute Percentage Error (MAPE)

Accuracy of Inventory Information % Position without Differences % SKU without Differences Total Value of Differences

Fill Rate Evaluation upl = unidades per line lpo = lines per order

Mediciones del Nivel Servicio del Inventario (Fill Rate )

Fill Rate Planning Average Inventory Value vs. Turns

Fill Rate Benchmarks per Industry 92.0% 90.0% 97.0% 94.0% 86.0% 88.0% 96.0% 98.0% X Motor Vehicle Parts Japan Electronics US Industrial Products Herb Davis Database Average Industry Category Fill Rate

Turns and Fill Rate Benchmarking per Company Navistar BellSouth Ameritech John Deere Lanier Kodak SPC IKON Xerox Novellus Hyster/Yale AMAT/IBSS Lucent Boeing Caterpillar Delta TANDEM Coca-Cola Parts Solar Turbine IBM Cummins Engine Ford CS

Standardised Benchmarking of Inventory Performance

Complexity Factor of Inventory Management

Complexity on Inventory Performance Benchmarking

Inventory Quality Rate (IQR) IQR = $Active Stock/ $Total Stock. IQR = AIV Active / AIV Total

Gaps Analysis of Inventory Performance