Control systems for spare parts.

Control Systems for Spare Parts
Medha Kumar Yadav

2 | P a g e (Medha kumar Yadav)
Control Systems for Spare Parts
1． Ordering System...................................................3
１）Order Generation for M&M....................................................................................3
２）Information to be Maintained...................................................................................4
2． Agni channel partners ordering system.................................6
１）Importance of Payment Arrangement......................................................................................6
２）Order process flow chart for E-MAIL ORDERS/DMS(for credit control)...............................7
３）Types of orders...........................................................................8
４）Lead times to supply of buy on demand........................................8
3． Points to be considered..........................................................10
１）Infrastructure......................................................................................10
２）Pricing of Spare Parts.......................................................................................10
３）Marketing & Sales Promotion..........................................................................10
４）Training and development......................................................................................... 10
4． Key Points of Warehouse Control........................................................11
１）Points to be Remembered by Staff and Management, and Checked Daily.........11
２）Data to be Collected and Analyzed by Management Monthly............................ 13
３）Sample Format of Control Sheet.........................................................................14
5． Receiving, Picking and Packing...........................................................16
１）Receiving and Storage.......................................................................................16
 Discrepancy type which comes in our SPARE BUSNESS UNIT(SBU)…16
 Location Management Principles…..17
２）Picking and Checking..........................................................................................17
３）Causes of Manual Back Orders...........................................................................18
４）Packing and Shipping.........................................................................................19
５）A Sample of Automated Distribution System in Warehouse (BAR CODE)...................20
6． Implementation of ObsolescencePolicy.............................................23
１）Policy on Slow Moving / Non Moving Stock............................................................................23
２）Slow Moving Stock (1 Yrs. Old Parts).................................................................................24
３）Very Slow Moving Stock (2 Yrs. Old Parts)...........................................................................24
４）Non Moving Parts (3 Yrs. Old Parts)....................................................................................24

1. ORDERING SYSTEM
1. ORDER GENERATION FOR M&M
The mission of the Purchasing member is to procure the highest possible quality of
Goods and services for the Company at the lowest possible cost. We assist
Departments in identifying best source for procuring the materials within the
Stipulated time.
Orders should be generated using the software. The order quantity of items depends on following
factors:
 Current stock in hand: The actual stock in hand with the Distributor (AGNI) and the time
required to exhaust that stock.
 Demand History: The demand for a particular item in last 12 months is taken into account for
order generation.
 Lead Time: Time from the date of ordering to the date on which the spare parts consignment
actually reaches the distributor. Factors that affect total lead time are order processing time at
M&M and transit time from M&M to Distributor.
 In addition to above mentioned factors, some more factors have to be taken into consideration.
-Seasonal changes, during the year and their effect on future demand should also be considered.
Some examples of the parts which have seasonal demand are:
Parts Season
Wiper Rainy
AC Summer
-Sudden Requirement of parts, Sometimes demand for a particular part increases due sudden failure
of that part & later on it comes down to normal level. This should also be taken into consideration while
preparing the orders.
 Frequency of Order: There is no particular time for placing orders by the distributor. It is
recommended that the distributor should fix a particular day to place the orders .Frequent
orders results in lower inventory of parts at distributor end, better cash management (better
fund rotation),better ordering of parts.
 Back Order: Distributor has to consider the items that have already been ordered but is
currently in back order with M&M.
 Transportation Time: It is the time taken for the consignment to reach the Distributor after
dispatch from M&M.
 Order processing – at M&M, on the day the order is received from the distributor, payment
check is done, order is processed and parts allocated. The picking instruction is generated,
picking and packing of parts is done, the parts are invoiced and dispatched.
 Material in Transit: Order generation through your system should take into account the
material in transit, i.e. the consignment that has been dispatched from M&M but has still not
reached distributor.

 Back order at distributor end: Order generation should also taken care of back order at
distributor end, i.e. the parts which are pending to be served to the workshop. Distributor has
to capture the demand for all the orders irrespective of stock availability.
 Re-order decision : A part is to be ordered on M&M if Stock +On order quantity <
Re-order level
 Re-order Quantity = Maximum Level - Stock - On order Back order at
distributor
 Re-order Level = Minimum Level + (Lead time*DBAR)
 Minimum Level is the minimum quantity of stock of an item at any point of
time.
 Maximum Level is the maximum quantity of stock at any point of time.
 DBAR is average monthly demand of parts.
Note: After generation of order by the software, the distributor must review the parts and
quantity in the order and make necessary modification as per requirement.
1. INFORMATION TO BE MAINTAINED
Procurement
 Demand vs. Supply from M&M to Agni
 Service level of M&M to Agni
 Order Ratio of Agni to M&M (REGULAR ORDER/VOR ORDER/URGENT ORDER)
 Parts in Back order of Agni from M&M
 Lead time calculation of parts coming from M&M to Agni
 Rate deviation comes in PI vs. .Invoice
 On order parts
 On transit parts
 Discrepancy Report (Damage/shortage/wrong supplied etc.) coming in each consignment
KPI - Order Ratio (Stock Vs. Rush & VOR)
 Order Ratio of Agni to M&M (REGULAR ORDER/VOR ORDER/URGENT ORDER)
Order Ratio: This indicates the efficiency of stocking of parts the customer need.
Ideal ratio is
Stock ordering – 90%
Rush & VOR orders – 10%
 Lower % on Stock orders indicate a poor Service level & hence potentially poor Customer
service
 Lower Stock Ratio means lower gross profit on parts Sales.
Sales
 Item wise, Posting group wise, location wise with M&M SUPPLY,M&M BY AIR & LOCAL
PARTS sales (Qty wise & Value wise) monthly
 3s,2s.1s,Retail, Un Authorized Workshop (UAW),counter, internal service sale monthly with
Target vs. Achievement
 Lost Sale data monthly
 Demand vs. supply
 Service level (Parts first fill rate) monthly (Distributor to Dealer & Parts Fill Rate to
workshop)
 Parts in your back order monthly of 3s,2s.1s,Retail, Un Authorized Workshop
(UAW),counter, internal service

Sales Data
s.
n
Part.
no
De
sc
201
6
201
7
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Jul
y
Au
g
Se
p
O
ct
No
v
De
c
Inventory
 Part no wise inventory (Qty & Value) monthly
 Posting group wise, location wise with M&M SUPPLY,M&M BY AIR & LOCAL PARTS
INVENTORY (Qty wise & Value wise) monthly
 Discrepancy Report (Damage/shortage/wrong supplied etc.) monthly from every location
during handling
 No sale in 1/2/3 year’s parts
 Dead Stock Amount
 Space utilized / inventory
Inventory Turnover Ratio
This ratio indicates how many time inventory is rotated in a year. This is the operational indicator of
ROI in spares.
Inventory Turn Ratio = Annual Sales @ Cost price .
Average Inventory @ Cost price
Bench Mark – 2.5 to 4 Turns
Higher contribution can be achieved through same
amount of inventory by maintaining higher inventory turns

2. AGNI CHANNEL PARTNERS ORDER THROUGH
EMAIL/DMS
1. IMPORTANCE OF PAYMENT ARRANGEMENT
Importance of payments timely arranged payments by dealers is necessary for AGNI to process order
.In other will be processed after payments are secured by AGNI.
Delivery lead time is calculated once the payment is confirm. If the payment is not prepared within a
certain period, concerned orders can be cancelled without prior notice.
As all orders will be processed after payment timely and accurate is essential for good service to our
customer.

2. ORDER FLOW PROCESS FOR REGULAR
IS STOCK
AVAILABLE
BACK
ORDER
YES
NORNAL PI FOR HAVING CASH IN HAND, CREDIT LIMIT OR CHEQUE
PI WITH ANNAXTURE FOR LC
Dealers order through Email/Dms (on process)
Validation (Checking of part no, order qty, Amount & order day)
Dealers gives order confirmation sheet to AGNI
IS PAYMENT
AVAILABLE FOLLOW UP WITH DEALERS
PARTS IS ISSUED
PICKING TICKET GENERATED
PACKING /CHECKING OF PARTS IS DONE
INVOICING IS DONE
YES
NO
NO

Types of Orders
The various types of order are;
Regular Order
Regular order is placed for stock replenishment. The regular order is to be placed on the ordering days
specified by AGNI and the same will be dispatched as per schedule communicated.
VOR Order
Such orders are to be placed only when a vehicle is off the road i.e. part without which the vehicle
cannot be functional & be back On-Road. One VOR order for one vehicle. These are required urgently
to provide service to the customer.
Emergency Order or Rush order
These orders are to be placed for cases where the parts are required on emergency basis.
Regular order (stock order)
Order receiving through mail in excel format/DMS (on process)
Receiving Order 1st to 7th and 20th / 25th of every month
Checking the availability parts on stock, Transit order & Back order (Order proceed to M&M)
Rush order (Emergency order): 3rd to 5th day delivery
VOR (vehicle off road) : 1 to 3 day if available
Lead time for supply of Buy on Demand
TYPE OF
ORDERS
SHIPMODE ORDERING
FREQUENCY
LINE
ITEMS
DATE AVAILABLE
PARTS
LEAD TIME
NON
AVAILABLE
PARTS
LEAD
TIME(BO)
REGULAR
ORDER(MONTHLY
FOR STOCK )
BY
LAND(TRANSPORT)
TWICE IN A
MONTH
NO
LIMIT
1st to
7th-21st
to 25th
IN
EVERY
MONTH
7 -10 DAYS 45 -60 DAYS
EMERGENCY OR
RUSH ORDER
COURIER TWICE IN A
WEEK
5
ITEMS
3-5 DAYS 35-45 DAYS
VOR ORDER BY AIR/COURIER DAILY 2
ITEMS
1-3 DAYS 10-15 DAYS
NOTE:
1. Freight charge will be paid by dealers on by AIR MODE (VOR ORDER& EMERGENCY ORDER)
Lead time for supply of Buy on Demand - Body Parts:
1) For all the filed supplies, the parts are sourced from the manufacturing plant.
Since these parts are not required in the field on a continuous basis, a definite
Lead time is required to supply them. Through analysis, it has been identified
That the parts listed out below require a lead time minimum of 60 days to supply.
2) This will be applicable to all the order types (VOR, Rush order or Stock order).
Our commitment on the supply of the rest of the parts will continue to remain
The same.
3) The list of parts is given below:

List of parts under BUY ON DEMAND Category
1. CARGO PANELS
2. BODY SHELLS
3. ASSY FRONT END LESS DASH PANEL
4. KIT ASSY PANEL FRONT & ASSY GUSSET
5. ASSY WHEEL HOUSE FRONT
6. ASSY REAR WHEEL HOUSE FRONT
7. PANEL ROOF
8. ASSY EXTN HOOD
9. CHANNEL DRIP RAIL SIDE
10. PANEL ASSY HEADER REAR
11. CAP DRIP RAIL
12. PANEL ASSY HEADER FRONT
13. PILLAR A INNER UPPER
14. PANEL RING
15. CHANNEL DRIP RAIL PILLAR

3. Points to be considered
1. Infrastructure
 For proper Parts storage
 Material Handling
 Transportation
 IT Support
-Proper Software to capture the data bases like part master, prices and to support functions sale and
inventory Monitoring.
2. Pricing of Spare Parts
 The Prices of similar parts of competitor models should be studied for competitive pricing.
 The profit margins of the fast moving parts should be flexible. It should be kept as such that it is
in comparison to similar competitor models.
 Comparison with grey market should be avoided as there is no quality assurance.
3. Marketing & Sales Promotion
 Close co-ordination with the customers is required.
 The consumption pattern at the workshops should be studied for better inventory management.
 The sales to the other users of parts can be increased by opening retail outlets.
 Maintaining the database about the Customers will help in retaining them.
 Door delivery of parts to be closer to the Customer.
Marketing
 The information about the availability of spurious parts is useful to capture the untapped market.
 Field representative for market study can help in the finding out the customer requirements.
 The sales potential has to be calculated according to the vehicle park.
 The potential market calculation will give a clear picture about the market share.
Sales promotion
 The Customer have to be educated about advantages of using genuine parts
 Advertisement in radio/Television and print media
 Road shows/service camps
4.Training & Development
Regular training to your staff, topics to be covered
1. System
2. Sales promotion
3. Operations
Regular training to your channel partners, topics to be covered
1. Selling techniques
2. Skill up-gradation
3. Awareness about genuine parts

4. Warehouse Control
It is important for a parts warehouse controller to have “cost consciousness” always in mind to
manage warehousing. And the cost does not solely refer to such direct expenses as material cost
and/or lighting and heating expenses, but achieving cost reduction through the optimized efficiency
of warehouse operations or trying to make the same process with less walking distance is also
important factor to realize the cost consciousness. This article explains how to measure
productivity and quality to maintain warehouse efficiency at a high level.
１． Key Points of Warehouse Control
SAFETY FIRST
5S (Seri Seiton Seiso Seiketsu & Shitsuke)
Safety and cleanliness are the two most important points to maintain in a warehouse operation.
Efficiency is a third. To achieve these ends, we offer some daily and monthly warehouse operation
checkpoints.
１） Points to be remembered by Staff and Management, and Checked Daily
a). FIFO:
Always visualize the order/ sequence of the
work. Once picking was completed, you
must not make multiple cairns of parts.
Arrange trolleys inline to make work in
order of Fast in Fast Out. In addition, do not
prepare too much tote box and trolleys
more than required for a day. Sometimes
little short in number of trolleys can boost
the total speed of operation,
b). Express the completion of a work
for the day:
Consolidation, packing & dispatching area
shall be cleared when closing the warehouse
for the day, and all work started on the same
day shall not be remaining on the floor. If it remains, it should be
apparent how many unit of work is remaining there on the work
place, in which sequence.
c). Reduction of Distribution Cost:
Transportation Cost, Inland Freight, Brokerage, Import Duty, etc.

d). Improvement of Productivity:
Operation speed, usage of transportation devices, arrangement of parts by movement,
avoiding backward process.
e). Reduction of Material Cost:
Packing and shipping materials,
f).Reduction of Claim Expenses:
Improvement of receipt, picking and packing quality
g).Reduction of Back Orders
h).Reduction of Stock Level
i).Maintenance of warehouse in tidy, clean and good order
It is necessary to analyze the results of points a) through f) On a monthly or yearly basis
by collecting and measuring related information on a daily basis.

A sample check sheet is provided below.
２） Data to be Collected and Analyzed by Management Monthly
a) Sales Amount (for Parts and/or Accessories)
b) Cost of Sales
c) Value (cost) of parts stocked by Vendor
d) Number of Items Received
e) Number of Part Numbers Registered in Computer (Total and Stocked Items)
f) Number of Part Numbers with Movement Code (M/C) 5 (Non mover) and 4
(Slow mover)

g) Total Inventory Amount and Divided by Movement Code
h) Inventory Amount of Parts where M/C = 5 and M/C = 4
i) Number of Orders by Order Type
j) Number of Ordered Part Numbers
k) Number of Lines (Part Numbers) in Back-Order Status
l) Number of Lines (Part Numbers) Shipped
m) Number of Lines (Part Numbers) Claimed for each Cause of Trouble
n) Claim Amount, divided by Cause
o) Number of Lines (Part Numbers) in “Manual Back Order” Status, divided by Reason
(“Manual B/O” also known as “Warehouse B/O” means back order created after
allocation and issuance of pick ticket. This occurs when actual stock quantity is shorter
than the stock quantity registered in the computer.)
p) Cost of Packing Materials
q) Transportation Charge, divided by Method of Shipment
r) Number of Workers
s) Total Working Hours of warehouse member by Type of Work
t) Total Warehouse Area in Square Meters
u) CBU (Complete Built Unit) Sales Amount
３） Sample Format of Control Sheet
Control Index Plan
Last
Year
Jan Feb
… … Dec
Total Formula
Part Sales vs. CBU Cost
Ratio
a÷u b÷a
Parts Sales per Person a÷r
Per Person/Hour
Number. of Lines Received
Number. of Lines Shipped
Number of Lines per Order
d÷s
l÷s
j÷i

Packing Material Cost
vs. Sales
p÷a
Transportation Cost
vs. Sales
q÷a
Manual B/O’s
Number of Lines
Ratio
o
o÷l
Claims
Number of Claims
Claim Amount vs. Sales Amount
m÷l
n÷a
Back Order k÷j
Stock Level Calculated in
Number of Months g÷b
Number of Stocked Part
Numbers where M/C = 5
(Dead Stock )
f÷e
Dead Stock Ratio h÷g
Stock Amount per square meter g÷t

5. Receiving, Picking and Packing
1. Receiving & Storage
For storage, it is very important to stock the part in the correct bin code. Once the parts are located
wrong bin code or default bin, it is almost impossible to find the parts during operation and their
recovery will have to wait until stocktaking. Therefore, if the parts are wrongly stored, it will not only
increase back orders, but it will also badly affect warehouse productivity and inventory control. To
prevent mistakes from occurring during storage, we offer the following suggestions:
 It is recommended that receiving be performed by two workers. One worker reads quantity and
location bin code from a receiving list based upon invoice information and/or packing lists.
Another worker counts the quantity received and writes the bin code on the parts. For bulky parts
in boxes, it is better to write the bin code on each box. To prevent writing or reading errors, it is
good practice to prepare beforehand a sticker with the part number, quantities and bin code to put
on the parts when they arrive.
 Separate parts by zone and row number of bin code during the receiving process to make storage
quicker and easier.
 If parts without a bin code assigned to them are discovered, immediately advise the person who is in
charge of assigning of bin codes.
 When storing the parts on the shelf, the part number should be matched with the part number on
the shelf. To make it easier to read and pick the parts for shipment later, the parts should be placed
so that the part number label side faces the front. The principle of “first-in first-out” should be
followed, where the newest stock is placed near the back or bottom of the existing stock, so that
the older stock will be shipped first. This prevents parts and their packaging from deteriorating due
to overly long storage periods.
 In case there is no space to store the parts, use a provisional space with the same bay number. If
there is not enough space even in the provisional space, advice the person who is in charge of
assigning bin code or warehouse in charge.
 If the parts are wrongly received in part number or quantities, or are damaged, advise an
warehouse in charge, spare head , inventory auditor & account about invoice number, case number,
part number and quantities. Take a picture of mistaken items in order to file a claim with
MAHINDRA & MAHINDRA. Take a picture of damaged items and their packaging in order to
file a claim with the shipping company.
 Discrepancy types which comes in our spare business unit (SBU) during
warehousing process:
 Excess (overage): Quantity of supplied parts is larger than what was invoiced or physical stock
is greater than system stock in locations during physical verification.
 Not Received (Shortage): Quantity of supplied parts is smaller than what was invoiced or
physical stock is lesser than system stock in locations during physical verification.
 Wrong supply: When a part is different from its drawings (parts are different in shape , color
and size from a correct one).
 Damage: Supplied part with external damage (Broken/dented/scratched…etc.)

 Defect: When a part has a manufacturing defect.
 Wrong Technical Information: Parts information from M&M has error or technical
problem.
 Not Ordered: BAW received parts which were not ordered.
 Price error: Charged price is different from ordered price.
 Subsidiaries: Obsolete parts which are caused by campaign.
 Location Management Principles
 Heavy parts should be stored on lower shelves near the entrance/exit and & light parts should
be stored on upper shelves located further from the entrance/exit.
 Fast moving parts should be stored on lower shelves near the entrance/exit & slow moving parts
should be stored on upper shelves located further from the entrance/exit.
 Valuable & sensitive parts should be stored and locked in a special area for safety.
 Hazardous parts (explosive or gas containing parts) should be stored in a special area for safety.
 A location map should be prepared and posted at the entrance of the warehouse for new
employees.
 Parts identification information in each storage space will help storing & picking.
 Vacant locations should be prepared and available for excess( secondary location) and new
parts.
 Relocation should be carried out periodically to increase storage, picking & space efficiency.
2. Picking and Checking
Picking is the most time-consuming job among warehouse jobs. Therefore, not only precise picking, but
also picking speed is important. Picking errors can be found during checking. If temporary workers are
necessary, it is better practice to use them as pickers and use permanent workers who have more
experience as receivers, checkers or packers. To prevent mistakes from occurring during picking and
checking, we offer the following suggestions:
 Pick several orders with a small number of items at the same time.
 Pick the entire box if the box is unopened and undamaged, and all the parts in the box are
needed. Do not open the box, pick out the parts, and then re-pack them later in another box
for shipping.
For example
It is not necessary to open the box to count quantities. Pick this qty.
50 PC for picking if the box in good shape (not broken).
 Check all digits of a part number.

 Pick the parts with part number printed on the Picking Slip/sheet only. Do not pick other parts
even if it is known that they follow in a modification chain.
 Pick the parts so as to follow the principle of “First In, First Out.” Try to pick the parts
stocked at the provisional space first. If there is enough free space at the original location, try to
move the parts from the provisional space to the original location.
 To make easy checking, try to limit the number of items that are put in a container to as few as
possible. Do not put more than all the parts listed on one page of a picking slip in any single
container, and do not mix parts from different picking slips in one container.
 Check the parts picked for errors using picking slips page by page. It is good practice to prepare
an additional checking slip sorted in part number sequence together with the picking slip for
warehouses that adopt the Fixed-Independent location system. This will reduce search time for
parts, because it is difficult to find the quantity to be picked from pick ticket sorted by location
code referring the part number of the parts picked by the picker.
 If there is no part available, or if the quantity is short, check the surrounding shelves above,
below, right and left of the shelf with correct location code. If the part is still not found, advise
the warehouse in charge & inventory auditor. This situation is called a “Manual B/O” or
“Warehouse B/O” and is described in the following section.
 The inventory controller should find the cause of the manual back order and take steps to
prevent the same thing from happening again.
3. Causes of Manual Back Orders
In the case where the actual quantity of stock available and stored in its correct location is less than the
stock quantity available according to the stock-management program, pickers are unable to pick the
parts printed on picking slip. It is necessary to register the un-picked, back-order quantities after the
allocation process. This back order is called a “Manual B/O” or “Warehouse B/O.” The number of
occurrences of manual B/O’s can be used as an indicator of the quality of control of the warehouse
operation. In general, an acceptable number of manual B/O’s is not more than 0.1% of the total number
of lines (part numbers) to be picked. It is very important to find the cause of a manual B/O and take
steps to prevent the occurrence of the manual B/O again. Following are some common causes of manual
B/O’s.
 When storing the parts received, they are placed on the wrong shelf.
 When picking, the wrong part or wrong quantity is picked.
 When registering receipt quantity into the computer, the registration is performed before
storing the parts on the shelf, or is performed twice.
 When storing, the parts were left on the floor, conveyer or other areas.
 The parts were stolen.
 When receiving the parts from vendor, quantity shortages or part numbers errors (miss-
shipments) were not corrected.
 When performing stocktaking, a count error was registered without correction.

4. Packing and Shipping
 When packing the parts, put heavy parts at the bottom of a container and light ones near the
top. For fragile articles, use adequate packing or filling material. For windshield packing, it is
better to use a packing carton specially designed only for glass.
 Use labels that indicate “Fragile”, “This Side Up” or “Heavy”’ where necessary. To
prevent dead space when putting individual cases into a crate, adopt a standardized carton
module of metric or English measurements that will fit neatly into the crates without waste of
space.
 Seal and ship out as many carton boxes as possible before end of each day and to minimize
picking, checking and packing jobs left “in process” and unfinished each day. This will boost
performance measures regarding number of lines shipped, and will prevent loss of items still in
process. To do this, put more manpower on checking and packing than on picking when close to
the end of the day. (At the beginning of the day, put more manpower on picking jobs.)
 For a large-size warehouse, provide an empty truck all day long in order to load packed carton
cases immediately after they are sealed and ready to ship out. This will avoid the need for
valuable storage space for cartons that are packed.
 Check for number of hours or days of delivery and delivery routes from warehouse to dealers
periodically.

5. Sample of Automated Distribution System in Warehouse
This section shows a sample of an automated distribution system to receive, pick,
pack and ship. Print invoice and address label, and automated transportation
charge calculated from weight, volume and destinations using barcodes.
A) Receiving
1. Retrieve shipment details by invoice
no, container no. and case no.
Received parts check against Invoice data
3. Print Receiving
location code.
ticket with
Receipt quantity entry
(For WMS, scan bar code of
Location code for booking)
2. Scan Bar Code printed
on the part number label
4．Scan Bar Code printed on the
part number label at the adequate
location to be stocked.
C R T 12110-34E 00-0F 0
Bar C ode Scanner

B) Picking and Packing
1. Retrieve order details by order no.
or pick ticket no.
Picked parts check against order or pick
ticket data.
Case number collection
2. Scan Bar Code printed on
the part number labels
3. Scan Bar Code printed on the
shipping container..
C R T 12110-34E 00-0F 0
C ase Data

C) Shipping
Data: Dealer Number, Part Number
Quantity, Price etc.
Data: Weight, Carton Volume
Number of Cartons
３．Print Address Label and Invoice/Packing
List
１．Read Bar Code on Picking Slip
２. Weighing Read Packing Carton
Size

6. Implementation of Obsolescence Policy
 Parts which have no consumption in last 3 years should be considered for Obsolescence as they
occupy space and carries Inventory holding cost
 Schemes should be floated with Traders / Retailers to liquidate such parts
1. Policy on Slow Moving / Non Moving stock
Even with the best of Inventory Management tools, there will be some inventory which may not be
moving but lying in stock
Such parts can be classified into 3
categories :Part group age
Description Category
I year Old Parts Parts not moved for more
than 1 year
‘Slow Moving
Stock’
2year Old Parts Parts not moved for more
than 2 year
‘Very Slow
Moving’
3 year Old Parts Parts not moved for more
than 3years
‘Non Moving
Stock’

2. Slow Moving Stock (1 year old parts)
Parts not moved for more than 1 year
 Probability of movement of such parts exists
Action plan:
 Such parts should be kept in the live locations of the warehouse but at the rear end
3. Very Slow Moving Stock (2 year old parts)
Parts not issued for more than 2 years
 Low probability of sale of such parts
Action plan:
 Take out from the live locations
 Pack in Carton Boxes
 List of the parts with quantity should be kept inside the box
 Paste the list on the outside of the box
 Keep the list with the Spare Parts Manager
 Plan schemes for liquidation of these parts
4. Non Moving Parts (3 year old parts)
Negligible probability of sale of these parts
Action Plan:
 Segregate these parts & scrap them as one time cleaning process
 Such parts should be taken out of Stock for reporting purpose
Obsolescence policy is to be implemented for such parts every year

Control systems for spare parts.

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Control systems for spare parts.