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This topic contains 3 replies, has 3 voices, and was last updated by Steve Trudell 6 months ago.
We are trying to develop some rules to be followed when determining if an item should be KanBan’d or discreetly purchased. We are looking into variation in demand over time, etc., as factors that can be used. Does anyone have anything similar in practice now?
There are no hard and fast rules, but there are some things you should consider to have an effective system. Are you in a make to stock environment or a make to order environment? Do you have long term agreements in place with your customers? Do you have long term agreements in place with your suppliers? What is the carrying cost of your inventory and what SKUs make up a majority of that cost?
What you truly need to understand is the fundamentals of the business and what your risks are based on the business climate in which you operate. The rest (average demand, demand variance) is just math.
Thanks. Understood. What I was looking for is if anyone has actually put a number to the demand variance to say “above this is too much variation to be a candidate”, etc.
I realize the number is highly dependent on the environment.