ELA Certification for Logistics Professionals

Performance Criteria (Standards – 2nd Layer)

2 Supervisory/Operational Management Level (EJLog)

2.2 Inventory Management

European Logistics Association

Standards – 2nd Layer Version 110101

© European Certification Board for Logistics 2011 1 Inventory Management

2.2.1 Classify items by demand characteristics

• Understand the importance of classifying items by demand characteristics

• Select demand categories according to turnover, quantities ordered, order frequency, demand variability, strategic importance, cost per item, ordering costs, procurement lead times

• Identify average demand parameters

• Measure demand parameters on a continuous basis, re-classifying items when appropriate

• Measure demand variability over the years, seasons, months, weeks, days of week, or other events.

• Monitor quality performance for demand classification

• Implement performance and quality improvements in demand classification

2.2.2 Identify major segments of inventory using ABC analysis

• Understand the importance of classifying items using ABC analysis

• Apply ABC analysis to classify items and understand when it is not appropriate to classify items using ABC analysis

• Select inventory management categories A, B, C, D… according to turnover, quantities ordered, order frequency, and throughput variability

• Measure inventory management parameters on a continuous basis, re-classifying items when appropriate

• Monitor quality performance for inventory management classification

• Implement performance and quality improvements in inventory management classification

2.2.3 Forecast demand using appropriate techniques for demand characteristics

• Assess past demand patterns and forecast reliability.

• Forecast demand using world class forecasting tools and software.

• Monitor forecast error

• Implement performance and quality improvements in demand forecast

2.2.4 Set safety stock levels and stock trigger points and determine order quantities

• Establish for each item turnover, quantities ordered (downstream), order frequency, demand variability, strategic importance, cost per item, ordering costs, procurement lead times

• Define stock management principles such as periodic or level-triggered procurement, based on weighted parameters

• Establish safety stock levels and stock trigger points for each item and possibly for different circumstances, based on principles above

Standards – 2nd Layer Version 110101

© European Certification Board for Logistics 2011 2 Inventory Management

• Establish ordering quantities for each item and possibly for different circumstances, based on principles above

2.2.5 Audit stock levels and identify improvement opportunities

• Understand the importance of measuring stock levels

• Select key performance indicators for stock levels

• Measure actual performance against performance standards taking appropriate action where necessary

• Plan for performance improvements in stock levels

• Review performance for stock levels after improvements

• Monitor quality performance for stock levels

• Implement performance and quality improvement in stock levels management

2.2.6 Manage the use of IT support for inventory activities

• Understand the importance of IT support in inventory management

• Select key performance indicators for IT support for inventory management

• Measure actual performance against performance standards taking appropriate action where necessary

• Plan for performance improvements in IT support in inventory management

• Review performance of IT support in inventory management after improvements

• Monitor quality performance in IT support in inventory management

• Implement performance and quality improvement in IT support in inventory management

• Use IT support for inventory activities

2.2.7 Utilise different inventory management systems

• Establish for each item links and dependencies in procurement (kitting, economic order grouping, bills of materials, MRP, MRP2…)

• Link inventory management policy with ERP or central planning procedures

2.2.8 Update, analyse, verify and reconcile inventory records

• Understand the importance of inventory reporting

• Select key performance indicators in inventory reporting

• Analyse data quality in inventory reporting taking appropriate action where necessary

• Plan for performance improvements in inventory reporting

• Review performance of inventory reporting after improvements

• Monitor quality performance in inventory reporting

Standards – 2nd Layer Version 110101

© European Certification Board for Logistics 2011 3 Inventory Management

• Implement performance and quality improvement in inventory reporting

2.2.9 Monitor inventory performance using appropriate measures

• Understand the importance of inventory performance monitoring

• Select key performance indicators in inventory performance monitoring

• Analyse inventory performance taking appropriate action where necessary

• Plan for performance improvements in inventory

• Review performance of inventory after improvements

• Monitor inventory performance

2.2.10 Contribute to the provision of inventory resources

• Understand the importance of inventory resources

• Contribute to the selection of key performance indicators in inventory resources monitoring

• Contribute to the definition of necessary resources

• Contribute to budgeting the necessary resources

• Contribute to the selection of the necessary resources

2.2.11 Contribute to the performance and quality control of inventory operations

• Understand the importance of monitoring performance and quality in inventory operations

• Contribute to the selection of key performance indicators in inventory operations

• Contribute to the definition of performance and quality standards in inventory operations

• Contribute to the selection of the necessary resources to monitor inventory operations

• Contribute to the monitoring of inventory operations

2.2.12 Contribute to development of plans and procedures for reverse logistics

• Understand the impact of reverse logistics on inventory management

• Contribute to quantifying cost information data regarding reverse logistics in inventory management

• Contribute to negotiating with partners in the supply chain to achieve optimum resource utilisation in reverse logistics e.g. manufacturing, marketing, purchasing, engineering etc.

•

Standards – 2nd Layer Version 110101

© European Certification Board for Logistics 2011 4 Inventory Management

2.2.13 Contribute to the development and use of inventory management processes and procedures

• Understand the impact of inventory management

• Identify best practices in inventory management

• Contribute to defining inventory management processes and procedures

• Contribute to defining performance indicators, financial and non-financial

• Contribute to optimisation, documentation and communication of processes on a continuous basis