| Business Case Solutions - 19 - Inventory by Project and Customer |
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| Business Case Solutions
The potential impact of residual inventory on profitability and cash flow increase the importance of understanding inventory on-hand by project or customer. There are numerous methods for purchasing and tracking inventory by customer or project. Some of the common methods are listed below.
Common Methods for Tracking Inventory by Customer or Project-
- Separate Inventory Locations - Creating separate locations in inventory for each customer or project simplifies the process of identifying and reporting on-hand values. However, this can make part crossing difficult and may require significantly more room for component storage. It may also increase the value of on-hand inventory overall as the same part may exist for each customer or project. If the contract with the customer covers the excess inventory and space isn't an issue, this may be the easiest method to manage.
- Unique Part Numbers - Creating unique part numbers for each customer or project can make it easier to report on-hand values and may require less shelf space than completely separate inventory locations. However, it can still make part crossing difficult. This may also result in an increased on-hand value as the same part may be loaded multiple times under separate part numbers.
- Part Number Labels - Labeling incoming parts for separate projects allows for consolidated inventory locations and simplified part crossing. It also will likely reduce on-hand values to minimum levels. However, reporting on-hand values may be difficult if it is a manual process.
- Purchases and Kit by Project - Purchasing for each project and kitting the components upon receipt will ensure parts are used in the kit for which they were purchased, and can facilitate on-hand reporting by that project. However, part crossing may be very difficult and the same component may exist in multiple locations. Additionally, once the project is complete, users must find a place for the residual inventory. Some companies will apply the cost of the full reel to the project thereby eliminating residual inventory, but this will increase the cost of the kit and may erode profitability or make it difficult to initially win the business.
- System Managed Inventory by Customer or Project - If possible, the system should maintain on-hand quantities and values by project or customer. This will allow for a consolidated inventory, increased buying power, and simplified reporting. If implemented correctly, it can reduce residual inventory as well.
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| Article ID: 3257 |
