Available Inventory

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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CIOP is an end-to-end supply chain certification program that focuses on practical aspects in addition to the theoretical concepts. For example, a typical supply chain certification may teach what is cycle counting and how to do the ABC classification. CIOP starts with these fundamental concepts and goes on to teach the participants to develop the cycle counting policy of an organisation, 10+ criteria used in ABC classification, multi-criteria ABC classification and cycle counting best practices to increase the efficiency and effectiveness. In case of CIOP, you learn the concepts and will be ready to implement in your day-to-day job in supply chain. The pedagogy is structured such a way that all the concepts are explained with industry examples, which makes CIOP as the preferred training and certification program for supply chain within the industry.


Available Inventory simply is the current count of on-hand inventory, minus allocations, replenishments, back orders, and (most importantly) numbers held for special quality issues, which, if left on the shelf, would create a glut. In other words, Available Inventory is simply the difference between total 

inventory and end inventory - divided by the number of units held back. In manufacturing terms, we could say that the available inventory represents the excess inventory a manufacturing facility has, over and above its on hand inventory, at the end of the manufacturing process. The term "short supply" is often used to describe this condition; however, it really only captures a part of the issue. Basically, in any supply chain, short supply may result from a poor mix of parts, a manufacturing error or an unanticipated problem.

One way to improve the available inventory and its relationship with inventory turnover ratio is to improve manufacturing process efficiency. Improving processes can improve production, reduce waste, improve inventory management, and generally improve a firm's bottom line. Many organizations are already taking steps to improve their supply chains. For example, several Fortune 500 companies have made major investments in materials and training programs for their assembly lines; as a result, these businesses now see their inventory levels fall well below their required levels on a regular basis. This investment in efficiency has produced other benefits as well: A decrease in non-manufacturing expenses such as labor and property taxes, a boost in profit and employee productivity, and a reduction in energy costs.

In short, a company should always strive to maintain a level of Available Inventory that is sufficient to meet current demand, but should not be so high that it exceeds the level of anticipated demand. Ideally, the level of inventory required should never exceed one to two months of inventory, inclusive of reserve inventory and open sales orders. Reserve inventory is stock that is earmarked for future use and not available for immediate sale; open sales orders are merchandise that a retailer can immediately place an order for but cannot guarantee the availability of at least that item until an agreed upon date. Ideally, reserve and open sales orders should be kept well under five months each.

Certified Inventory Optimization Professional 

CIOP is an end-to-end supply chain certification that contains 30 modules such as Introduction to Supply Chain Management, All About Inventory, Production Planning System, Strategic Business Planning, Sales & Operations Planning, Master Scheduling, Material Requirements Planning, Demand Management, Capacity Management, Forecasting, Production Activity Control, Procurement, Order Quantities, Independent Demand Ordering Systems, Warehouse Management, Transportation Management, Supplier Relationship Management (SRM), Customer Relationship Management (CRM), Introduction to Quality, Introduction to Packaging, Introduction to Process, Lean, Six Sigma, Total Quality Management, Theory of Constraints, Supply Chain Technologies, Supply Chain Techniques, Industry 4.0, International Standards and Supply Chain Risk, Safety and Security. 

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CIOP Knowledge Series

One-Minute Supply Chain Facts

The most recent video is available here. To access the past videos in the One-Minute Supply Chain Facts Series, please click the playlist icon located on the Top-Right of the video.





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