Efficient management of product inventories for commercialization

About this Project

Purpose and intention

Establish an efficient Management Model of product inventories for commercialization, which allows adequate decision-making in the management of Stocks in all its stages (inclusion, restocking, promotion and cleaness ) and the resources that are necessary for optimal operation.

Process to achieve the goal, model building:

Multi-criteria description of factors that influence the high level of slow moving inventories

  • Inclusion of all criteria related to the brand of each product, quantity of historical sales and behavior of orders.

  • Obtaining the expected demand for products with stocks in inventory.

  • Demand classification ( low , medium , high).

  • Discovery of the totality of factors that imply a 'Low demand'.

Definition of new factors, for an early detection of products that could become idle inventory

  • Classification of products that in the discovery due to the defined factors were anticipating a 'Low demand' in the short term.

Determination of factors to consider for products that must be kept in inventory on a recurring basis

  • Definition of the factors that appeal the experts to evaluate the products that must be kept recurrently in inventory for sale.

  • Determination of the parameters that make sense for each factor, reflecting it in terms of membership for each one

  • Application of the Evaluation on the more than 4,000 product codes with the defined criteria

  • Obtaiment from around 250 products that will be considered to calculate the quantities to be kept in inventory

Reference reading to take on consideration

Inventory is the most important asset for the company, currently it represents more than 50 million pesos per month on a recurring basis.

This inventory is made up of a significant amount of equipment that is being purchased with measure , for projects already sold (30%) and another component (70%) is the equipment that is kept in stock to satisfy the demand for recurring sales

A large part of these stocks to satisfy demand, have equipment that has not been moved in a long time (+ 12 months). What will financially affect the company, being a technology team, will surely represent losses as soon as the Management defines that it is time to eliminate them from stock.

The above is probably derived from an incorrect calculation of models and / or quantities of equipment that had to be acquired as stock.

Additionally, it is also likely that equipment from Orders that were canceled by customers is mainted there and no action was taken in time to auction the equipment and / or return to the manufacturer.

The problem is that there is no adequate model to support decisions to acquire stocks, manage excess stocks and define restocking policies both internally and with manufacturers. This is a priority, since, having such a high expectation of growth, it is very important to invest in the right products and quantities to have a minimum loss in the short term, with the implementation of a model that meets these characteristics.

The model must include a Decision Support System for implementation and recurrent updating of the resources, policies, and procedures listed below:


  • Personnel required for the operation

  • Recommended storage locations and volumes by location

  • Shipping / distribution units


  • Brands and products labeled as stock

  • Brands and products tagged as Projects

  • Ideal stock replenishment scheme (Reorder Point, EOQ, Safety Stock)

  • Definition of 'Slow movement'

  • Promotions for ‘Slow motion’ teams

  • Re-stocking with manufacturers


  • Stock replenishment

  • Promotion of ‘Slow motion’ teams

  • Stock cleaning

The above will allow improvement in the following points:

  • Idle inventory. Substantial reduction in the amount of inventory that is maintained even when little turnover has been detected.

  • Excessive warehouse occupation due to over inventory. Use warehouse spaces for materials with adequate rotation and that physically allow easy easy access, as well as better control and order.

  • Greater quantity of refill orders with a volume adjusted to the need. Smaller and smaller orders with greater frequency, on the teams that show the projected consumption.

  • Early detection of idle inventory for negotiation with manufacturers. Delimitation of equipment with low turnover that can be relocated with manufacturers in the early stages of their life cycle.