carries it!" I've also heard, "Someone will buy it some day," "We spent too much money on it to throw it away", and, the best one of all "We've written it off, so it doesn't cost us anything". Turn all those mistakes into whatever cash you can. Liquidate, donate, have a sale. Set an inventory turns target and increase an item's turns by increasing its velocity or get rid of it. If your customers leave you because you don't carry some obsolete inventory item, you've got bigger problems than this paper can address.6. Eliminate variation - Erratic vendors, yield problems on the shop floor and other quality problems cause unneeded inventory to pile up because the response is order early, order more than we need, start more than the forecast and increase safety stocks throughout the system. If a product has an 80% yield and you need 100 units, on average you need to start 125 units to average 100 units completed. The trouble is you will only get 100 units 50% of the time! So one quickly learns to start 140, 150 or more to insure a yield of 100 every time! Sometimes this results in 120 units completed and the extras go into inventory, not to mention the extra raw material and capacity required. 7. Replenish based on market demand - Forecasts are great and necessary but they are no more than educated guesses. And the farther out into the future the forecast the higher the probability that the guess will be very wrong. To use market demand to replenish finished goods keeps the inventory level aligned with what customers are actually buying. Of course you will have to do all of the above six things well to do this effectively, but it's possible. So there it is. In these days of ERP systems, information technology and other high tech systems, it almost seems too simple. I can assure you that these things are easier to talk about than to execute, but the payoff is worth it. Part B of question 2.)What Is a Data Warehouse?A data warehouse is a deci...
