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  • Writer's pictureSedat Onat

Minimum Stock

What is Minimum Stock?

Minimum Stock is an important part of Stock Management that plays a critical role in Supply Chain is an element. It reduces the risk of being out of stock in case of demand fluctuations, malfunctions, etc. Thus, while increasing internal/external customer satisfaction, it also helps reduce purchasing costs thanks to planned purchasing.


Benefits of Minimum Stock Tracking

  • Prevents material and time losses that may occur due to material shortage,

  • Provides economy of scale and transportation savings thanks to bulk ordering,

  • Thanks to bulk ordering, it reduces the number of orders and eases the burden on the buyer.

  • Whiplash Effect reduces,

  • Improves relationships with internal customers.


What needs to be done to increase its benefits

  • Standardization should be achieved in materials.

  • Seasonal changes should be kept up with in a timely manner.

  • More precise predictions should be made with data analytics.

  • Minimum Stock Quantities should be updated regularly.

  • More accurate inventory tracking with Kanban Card to be done.


Risks of Minimum Stock Tracking

  • If there is too much water in the river, the irregularities in the ground may not be visible and may hide problems in consumption and order management.

  • Towards the end of the project or production, excess stock may occur.

  • Low stock turnover rate due to large purchase lots increases the cost of keeping stock.

  • Creates the need for additional stock space (Nebol, et al., 2014 January p. 86).

  • It may cause purchases of larger or smaller lots than necessary due to estimation errors.

  • Requires constant precise monitoring.


Minimum Stock and VMI (Vendor Managed Inventory) Comparison

Minimum Stock and VMI (Vendor Managed Inventory) Comparison

How to set up Minimum Stock Tracking?

  • Minimum Stock Tracking items are determined.

  • A unique Material Code is opened for each item.

  • Delivery times of the materials are determined.

  • The usage amounts of the materials for the last 3 months are determined.

  • The minimum stock amount is determined accordingly.

  • Order blocks are agreed (For example: Minimum Stock x 2).

  • Minimum Stock Report is prepared and shared regularly.

  • Minimum Stock Quantities are checked and updated periodically according to seasonality and business status.

  • Slow Moving Materials Report will be drawn at regular intervals, and the effectiveness of the Minimum Stock Report is checked again.

 

Resources

  • Nebol, Erdal, Uslu, Tanyeri and Uzel, Ezgi. January 2014. Supply Chain and Logistics Management. 3. Istanbul: Beta Basım A.Ş., January 2014. s. 372. ISBN 978-605-377-055-4.

 

Photos

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