I am looking for some information on parts phase in. I have in the passed worked with an inventory of 500,000+ at cost using a 3 hits in 9 month criteria with a demand of 3 pieces. Because I had a large wholesale bussiness it seemed to work well. I now have an inventory of 200,000+ all of it mechanical and I am trying to build a wholesale bussiness. I am considering a 2 hit in 6 month criteria with a demand of 3 pieces. Any thoughts on the matter?
phase in
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phase in
by Gary J. Naples » Sun Feb 27, 2000 6:27 pm
Hi Chris,
I'm a little confused by your question, because you say the $200K+ inventory you now manage is all mechanical. Or, did you mean the wholesale portion of your business is all mechanical and accounts for $200K + of the entire inventory?
If you are contemplating accelerating your phase-in criteria to 2 hits in a 6 month period, for the entire inventory, I would be cautious. That's an aggressive approach. You will want to monitor the inventory very carefully to prevent an increase of obsolete stock.
A better option would be to set up a seperate source for only those parts that you want to phase-in faster. In any event, any time you choose an aggressive phase-in you increase the potential for building obsolescence.
Try it, but do watch the inventory activity carefully.
Gary J. Naples
I'm a little confused by your question, because you say the $200K+ inventory you now manage is all mechanical. Or, did you mean the wholesale portion of your business is all mechanical and accounts for $200K + of the entire inventory?
If you are contemplating accelerating your phase-in criteria to 2 hits in a 6 month period, for the entire inventory, I would be cautious. That's an aggressive approach. You will want to monitor the inventory very carefully to prevent an increase of obsolete stock.
A better option would be to set up a seperate source for only those parts that you want to phase-in faster. In any event, any time you choose an aggressive phase-in you increase the potential for building obsolescence.
Try it, but do watch the inventory activity carefully.
Gary J. Naples
- Gary J. Naples
phase in
by David S » Tue Feb 29, 2000 5:25 pm
Chris
Much like Gary, I am left a little confused as to the results you desire. I have the feeling that you are trying to increase the breadth of your inventory. Though I have not seen any statistical data on this issue I believe that a Phase In of 2 in 6 will have the opposite effect. Although it will depend on the individual parts demand history, will not a 2 in 6 provide a similar affect as a 4 in 12? Thereby being more restrictive? If you really want to increase the range of parts stocked I would recommend falling back to the basics. An inventory cannot be proactive. You base your stocking decisions on past sales history. You need to insure that your employees are posting total demand.
Collect all lost sales.
Record your emergency purchases correctly.
Make sure that NS parts are retained long enough for the possibility of Phase In.
Control proliferation of NS parts on-hand.
Reduce your exposure to obsolescence.
Assuming you are on ADP with 3 in 9 Phase In and a 1 in 9 Phase Out you will eventually build the inventory you desire. Personally, with respect to Phase Out I think you would be doing yourself a favor if you ran an English statement for parts with no sales over 6 months and converted these to AP.
Personally I love this topic and wish that we could get as much participation as Special Ordered Parts Not Used In The Shop.
David S
Much like Gary, I am left a little confused as to the results you desire. I have the feeling that you are trying to increase the breadth of your inventory. Though I have not seen any statistical data on this issue I believe that a Phase In of 2 in 6 will have the opposite effect. Although it will depend on the individual parts demand history, will not a 2 in 6 provide a similar affect as a 4 in 12? Thereby being more restrictive? If you really want to increase the range of parts stocked I would recommend falling back to the basics. An inventory cannot be proactive. You base your stocking decisions on past sales history. You need to insure that your employees are posting total demand.
Collect all lost sales.
Record your emergency purchases correctly.
Make sure that NS parts are retained long enough for the possibility of Phase In.
Control proliferation of NS parts on-hand.
Reduce your exposure to obsolescence.
Assuming you are on ADP with 3 in 9 Phase In and a 1 in 9 Phase Out you will eventually build the inventory you desire. Personally, with respect to Phase Out I think you would be doing yourself a favor if you ran an English statement for parts with no sales over 6 months and converted these to AP.
Personally I love this topic and wish that we could get as much participation as Special Ordered Parts Not Used In The Shop.
David S
- David S
phase in
by David S » Wed Mar 01, 2000 12:33 am
Chris:
In my earlier post above I had noted that I have never seen any statistical data on a 2 in 6 Phase In.
Well, now I say that I am man enough to admit when I am wrong. (Just don't tell my wife I said that.)
I pulled an entire inventory of over 16,000 part number with history into Access. Running a Phase in of 2 in 6 with a total of 3 pieces compared to a 3 in 12 with 3 pieces, I found nearly 60% more part numbers qualified with the 2 in 6 criteria. Remember that this was run against the entire inventory regardless of current stocking status. But still, that is a significant difference.
Conclusion in my opinion is that A) 2 in 6 is not more restrictive. In fact its way too liberal. B) If you use this criteria you will either be working way too hard rejecting parts or you will severely increase your potential exposure to obsolescence.
David S
In my earlier post above I had noted that I have never seen any statistical data on a 2 in 6 Phase In.
Well, now I say that I am man enough to admit when I am wrong. (Just don't tell my wife I said that.)
I pulled an entire inventory of over 16,000 part number with history into Access. Running a Phase in of 2 in 6 with a total of 3 pieces compared to a 3 in 12 with 3 pieces, I found nearly 60% more part numbers qualified with the 2 in 6 criteria. Remember that this was run against the entire inventory regardless of current stocking status. But still, that is a significant difference.
Conclusion in my opinion is that A) 2 in 6 is not more restrictive. In fact its way too liberal. B) If you use this criteria you will either be working way too hard rejecting parts or you will severely increase your potential exposure to obsolescence.
David S
- David S
phase in
by Gary J. Naples » Wed Mar 01, 2000 8:42 am
David I couldn't agree more with your comments. From my persepective, the most damaging affect of an agressive phase-in approach would be the potential for higher obsolescence.
Chris, sticking with the basics as David suggests is good advise. I also recommend that you consider building the inventory slowly. That way you retain greater control and its not a strain on working capital.
If you feel you must expand the range of parts stocked look at reducing excess stock and other possible reductions you can make in the existing inventory. That way if you must be a bit more aggressive in your phase-in, the percent of total increase will be offset by any decreases you made. The objective is the phasing in of new parts with as little impact to total inventory investment as possible.
Great topic!
Gary J. Naples
Chris, sticking with the basics as David suggests is good advise. I also recommend that you consider building the inventory slowly. That way you retain greater control and its not a strain on working capital.
If you feel you must expand the range of parts stocked look at reducing excess stock and other possible reductions you can make in the existing inventory. That way if you must be a bit more aggressive in your phase-in, the percent of total increase will be offset by any decreases you made. The objective is the phasing in of new parts with as little impact to total inventory investment as possible.
Great topic!
Gary J. Naples
- Gary J. Naples
phase in
by joe r » Mon Mar 06, 2000 10:22 pm
I use 2 in 6 months as my phase-in for my
Chrysler inventory but not for my imports.
I also have a second phase-in source set at 3 in 9. Chrysler has a very good return
program so I feel I can be more aggressive
in putting new parts on the shelf because I can always earn enough return allowance if it doesn't sell. But for more expensive items or parts for older vehicles I move them to the second phase-in source.
I have found that about 60% of parts stocked after 2 hits will sell again.
Joe R
Chrysler inventory but not for my imports.
I also have a second phase-in source set at 3 in 9. Chrysler has a very good return
program so I feel I can be more aggressive
in putting new parts on the shelf because I can always earn enough return allowance if it doesn't sell. But for more expensive items or parts for older vehicles I move them to the second phase-in source.
I have found that about 60% of parts stocked after 2 hits will sell again.
Joe R
- joe r
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