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In our previous Actionable Insights blog, we discussed QAD’s Customer Sales and Service Action Center. Next we will provide an overview of the Inventory Value Action Center as well as the associated key performance indicators (KPIs).

Inventory Value Action Center Overview

Managing inventory is one of the most complex and critical jobs in all of manufacturing, so the ability to keep a close eye on fluctuating inventory values is crucial to any company’s success. The ability to monitor the value of specific items or classes of items helps to ensure that inventory policies are effective, and monitoring safety stock inventory can keep the investment as low as possible without unreasonably affecting customer results. In fact, inventory management can be a thankless task—there’s always too much or not enough of something on hand, which is the reason the inventory value action center will prove invaluable to inventory planners and managers. Here’s a look at the KPIs included and how to use them to monitor inventory management effectivity.

KPIs for Effective Inventory Value Calculation

QAD Action Centers provide analytics to help both managers and users monitor metrics and KPIs. KPI highlights for the Inventory Value Action Center include:

Inventory Value by Item Type: This chart color-codes safety inventory by whether it is safety stock or safety time inventory. Safety stock is inventory on hand beyond typical requirements purposely kept to avoid stock-outs. Safety time inventory is purposely kept on hand to absorb demand for items with variable or uncertain lead times. In both cases, inventory managers need to be aware of the value of safety inventory because too much can needlessly inflate inventory values while too little may lead to excessive stockouts and unhappy customers.

Safety Stock and Safety Time Value by Product Line: When separated by product line, the safety value can help planners and managers ensure that they are allocating their safety inventory budget to the most important product lines. It may also show variation in product line planning philosophies, which may require adjustment to keep inventories in line with company strategies and priorities.

Inventory Value by Product Family: Like the other product line specific KPIs, this visual shows inventory values by product family, which can help to ensure that the inventory investment is in line with company priorities. It can be especially helpful during product lifecycle planning to ensure that use-up goals are met.

Safety Stock and Safety Time Value by Product Line: This bar graph shows the value of safety stock and safety time inventory by product line. Each product line is shown in its own column, making it easy to see the investment by product line. The visual makes it easy to determine quickly whether the safety inventory budget is allocated in conformance with company priorities and can quickly point out which, if any, product line policies should be reevaluated.

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The Importance of Effectively Managing Inventory

Since inventory value is so crucial to the success and profitability of every manufacturing company, it pays to keep a close eye on the controllable aspects of inventory. QAD Adaptive ERP makes this easy with the Inventory Value Action Center, helping companies to manage inventory in line with their internal strategies and customer needs.

Which KPIs and metrics are most important to your organization? Learn more about QAD’s predefined Action Centers by role as well as best practices for each.

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