All Inventory is not created equal. Inventory classification is the backbone of distribution profitability. Important inventory management criteria such as customer service level, margin, days supply and EOQ can not be applied across the board by vendor or product category. Therefore, different types of items must be managed differently. Inventory Classification Innovation: Paving the Way for Electronic Commerce and Vendor Managed Inventory takes a quantum leap forward and explores inventory classification techniques used successfully in large multi-branch distribution for over 25 years. In his book Broeckelmann develops the innovative concepts of Type and Stock Code classifications.
Type classification is based on the fundamental characteristics of an SKU - Cost and Demand. The author details a proven method of segmenting inventory by cost and demand to recognize the difference in SKUs; thereby allowing appropriate classification and the ability to treat different SKUs differently. Type allows implementation of the important inventory management criteria to classes of items that are homogeneous, independent of vendor or product category. Stock Code deals with the quantitative/subjective differences of how a product could be purchased and distributed in a multi-branch environment. Stock Code ignores vendor and product categories and allows purchasing and distribution based on item fundamentals such as 'required inventory' and 'central warehouse stock only', etc.
Timing is critical. Don't rely on ineffective ABC methods, or worse try to reinvent the wheel for e-commerce. This book presents a new and unique method for inventory management and pricing matrix development to meet the needs of the virtual marketplace. You will find the techniques to start thinking beyond the one-size-fits-all approach of the ABC Inventory Method, and begin using the innovative Type & Stock Method. Inventory Classification Innovation truly paves the way for electronic commerce and Vendor Managed Inventory.
Table of Contents
Where is the Classic Distribution Channel Today?
Why This Book Was Written
All Inventory is Not Created Equal
Distribution is an Art and a Science
Inventory Type Classification Results
Stock Code and Other Classifications
A Comparison to the ABC Method of Classification
Using Type Classification to Develop Pricing Profiles
Inventory Management System Requirements
Supplier Assisted Inventory Management
Distribution Management Philosophy
Information Technology Concepts
"'All Inventory is not created equal' is a powerful and true quote for a multi-branch supply house like APR. This practical approach to inventory classification puts new focus on how we can reduce and balance our inventory. The supplier assisted inventory management ideas in this book are the breakthrough we need to improve our service levels and reduce costs."
-Randy Tice, CEO, APR Supply Company
Former President, American Supply Association
"We agree with Russ Broecklemann's comprehensive class code formulas so completely that they will be incorporated in an upcoming release of our PROSAIM® software for vendor managed inventory. This book is a must read for inventory managers, distributors and their supplier partners."
-Ed Heon, Chairman and Chief Technology Officer
Profile Systems, Inc.
"During his 25 years and hundreds of hours of pro bono work for the distribution industry, Russ Broeckelmann perfected his concepts of "precision distribution". Market dominance will belong to those distributors (what ever they may be called) who practice the kinds of thoughtful methodologies that are described in this book."
-James D. Wilder, Executive Vice President, Northamerican Heating, Refrigeration & Airconditioning Wholesalers Association
"Russ Broeckelmann clearly understands asset management, particularly as it applies to inventories. His tried and true methods as described in this book have resulted in higher gross margins, improved inventory turnover and lower obsolescence at our organization. I highly recommend it to all inventory managers, purchasing managers and distributors."
-Mark P. Layton, Executive Vice-President
Genesee Group Companies
"Russ's inventory "Type and Stock " classification system, as described in this book, allowed Thermal Supply, a Pameco/MLX company to significantly outperform its sister company peers, especially in the areas of slow moving inventory control and disposition."
-Bill Panny, Former CEO of MLX Corp., Former President of Bendix Corp., Former Executive Vice President of Rockwell International