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11/04/2020

Managing By Exception – Part IV, Focusing on The Most Important Situations

Presented by: Jon Schreibfeder, President, Effective Inventory Management, Inc.

A few months back we discussed the importance of reviewing unusual usage at the end of each month or week. That is examining situations where your forecast of future demand was substantially different from the quantity actually sold or used. Many of you contacted us and asked about making the best use of the time you have available to work on this important task. This month we will discuss how to focus on the situations that most need your attention:

Here are some typical parameters for defining high and low activity:

 

Rank

High %

Low %

A – Top 80% of Hits

100%

50%

B – Next 15% of Hits

200%

25%

C – Next 4% of Hits

300%

0%

D – Last 1% of Hits

400%

0%

X – No Hits in Past 12 Months

Any Sale Quantity

Not Applicable

 

Organizing your unusual usage review in this way will assure that you review the most important situations first. And if you don’t have time to look at every single instance of unusual usage, at least you’ve addressed those situations that will have the greatest effect on customer service.

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