Optimizing Inventory Levels in a Medical Device Company

Abstract

Having material shortages can be dangerous to production since it can cause lack of product availability for sale therefore making the company unprofitable. Only measuring the weeks of inventory and inventory turns can be misleading since these two ratios can indicate that the inventory is under control when is not. Considering the safety stock coverage as part of the analysis can help identify what percentage of the items have the necessary inventory available to run the manufacturing line effectively. In order to calculate the optimum material quantity to have healthy levels of inventory, the ABC Analysis was used. Also, to make ensure the Enterprise Resource Planning (ERP) System provides the right signals, a kaizen event was implemented to identify all the parameters that needed to be updated, to what quantity and the owner of them. As a result, the variable of Buyer and ERP System Execution decreased its occurrence 28%. Key Terms - DMAIC, Inventory Control, Inventory Optimization, Supply Chain Management