Inventory Optimization

The rollstock optimization demands a continuos analysis to supervise that any factor could be identified in advance to allow the plant to take the proper actions.

Sales Variations:

A corrugated plant should decide the amount of its inventory's level.  To determine this level several calculations have to be done, but despite many plants do not pay attention to the sales forecast or consider it useless, it worths investing time and resources in obtaining this information because it could help the plant to identify promptly the uncoming changes in the market.

 

Only the sales reps are in touch with customers, only they have a better understanding of the customer's needs.

One of the most important factors to contol the inventory is called: TIME. As soon as a plant identifies the need to increase its inventory they have to send an order to the mill.

If there is no daily information analysis or if the planner or person who replenish the inventory don't carry out a daily physical inspection, it will be more difficult to realize that it's necessary to replenish the inventory as soon as possible. 

There is a period of time in which it isn't easy to realize that the inventory is decreasing dangerously.

Nobody in the plant could advise about the sales variations than the reps, they have to send an alert when there may be a drastic change in sales.

Amount of Inventory:

What's the amount of inventory a plant should keep in the plant?

Definitely it isn't an easy question to answer because each plant works under different circunstances like the type of market, sources to get the paper, space to store the paper, government procedures, etc., but the company should define the tolerances and parameters to measure the roll stock optimization, for example, the number of days of security stock, the period in which a roll is considered obsolete, quantity of buttrolls, etc.

In the section of Trim Waste can be appreciated with a practical exercise that opening more widths may increase the cost of the inventory more than the cost of the trim waste, so there is a false idea that a greater amount of widths are going to reduce the costs.

The common parameters for measuring the health of the inventory are:

  • Days of Inventory

  • Trim percentage.

  • Amount and period of aged rolls.

  • Number of buttrolls.

  • Percentage / Days of Safety stock.

And it should be included a percentage to measure the balance of the inventory and the total cost of the inventory.

Every plant should define the number of days of Inventory according to the time to replenish the Inventory, the safety stock and of course some other factors, but it's important to pay attention to the aged rolls.

An analysis is required to determine the precise amount of widths to balance the cost of the trim waste and the cost of the inventory.

It's mandatory to carry out an analisys to a deep level in order to get accurate information to know in detail the amount of inventory a company should buy.

If your company doesn't perform an accurate analysis, it is very likely that your plant is facing the classic problems of overstocks and shortages of inventory at the same time. A trim waste may be low, because you have several widths but that in turn can generate a higher cost of buying paper.

So the first step is for your company to define the inventory measurement parameters.

 
 

Balanced Inventory:

In general, the industry defines an approximate percentage of 60/40 for liners / mediums.  Although this is a good number to measure the balance of the inventory, it's important to analyze the quantities for each grade and width.

These percentages may change due to the time and difficulty to replenish inventory, but if you add the amount of your purchase orders, you can see a better picture of whether the inventory will be balanced in the next periods or adjustments are necessary.

Contact:  Phone: (+52) 661 1109146

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