Feedback from our original post on inventory management is strong. AHD founder, Kirk Augustine offers an update to his original paper. He identifies supplier issues and resets to reorder points during a prolonged disruption period like we’re currently experiencing.
Source: Animal Health Digest, April 16, 2020. < Link > At the four- to six-week point in a disruption period, movement of individual SKUs may be more meaningful than their economic value. For example, face masks, gloves and disinfectant may never carry enough weight to become an “A” item but are being destroyed at a historical rate of use.
INSIGHTS: We don’t often think about evaluating suppliers except by price quote. Industry information indicates every purchase order carries a cost of $57 to hundreds of dollars. Augustine says that purchase order cost is calculated with this formula:
Purchase order cost = average time for all replenishment steps * Per minute cost of the resource.
We’ll consider this topic for a later date.