Computerized maintenance of records can help largely in identifying potential obsolete items. Market intelligence should be practiced as a norm. Using the FSN analysis, the non-moving (N) items can be tracked. Care should be taken that the critical or insurance items are not be included in this list.
This method can also be combined with the XYZ analysis to identify obsolete items.
- X -items account for 70% of value but about 10% of stock items,
- Y -items account for 20% of value but about 20% of stock items, and
- Z - items account for 10% of value but about 70% of stock items.
Here, items coming in Y and Z category need attention whereas X category items are very critical as they constitute a large value. Other than very necessary or insurance items, the excess items should be used or disposed quickly.
One way of controlling can be to introduce buyback clause or having centralized purchase which can better plan to keep a low spares level as it can divert these to other sites.
Yeah this is superb explanation.
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