DEADSTOCK INVENTORY IDENTIFICATION AND DISPOSITION

Open Access
Author:
Kakarlamudi, Sai Phanindra
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
June 18, 2018
Committee Members:
  • Dr.Vittal Prabhu, Thesis Advisor/Co-Advisor
  • Dr.Andris Freivalds, Committee Member
  • Dr.Robert Voigt, Committee Member
Keywords:
  • Dead Stock
  • inventory management software
  • SAP
Abstract:
The current research focuses on identifying the dead stock Inventory using SAP software and determining the necessary steps in disposing each category of dead stock. Dead Stock stands for the inventory that is not sold to the customers and has been residing over the shelves for a specific period in the Warehouse. The main objective of the project is to reduce the dead stock (D-stock) since overstocking causes customer reductions, quality issues, over order/over shipments etc. Dead stock also costs businesses money. The reduction of Dead Stock inventory is determined by following a systematic procedure. Initially, the as-Is process is documented to acquire knowledge about the past and present state of the organization’s process and capabilities. Based on the as-Is process, to-be process is developed by focusing on parameters that would result in faster disposal and faster space free up when compared with the as-Is process. One of the tool that was developed to clear the inventory is “Scrap Check List”. In addition, different Six Sigma principles have been used to identify and validate the deviations in to-be process, and to develop counter measures there by achieving cost reduction as well as continuous improvement. In addition, the book value and the Inventory holding cost are also taken into consideration to determine the amount of money saved by implementing the to-be process. The disposition process steps includes selling the parts to Aftermarket, return to vendor for rework/dis-assemble to reuse parts, customer delivery. If none of the above steps is accomplished and the components have no other alternative use, scrap documentation has to be submitted to clear the inventory. A process model in the form a swim lane drawn using Visio software is established to provide an overview of the dead stock disposition process. In addition, an overview of inventory management software is provided and the necessary steps involved in extracting data pertaining to dead stock using SAP is discussed. By standardizing the to-be process and implementing continuous improvement techniques, the dead stock amount has been reduced from $16 Million to $3.3 Million.