Development of a Sustainable Inventory Management System for Maintenance Industry

Excessive inventory is harmful to any organisation, and typically adds to high inventory carrying costs, reducing employee efficiency, increasing equipment expenses, and causing a loss of opportunity. This study considers inventory management techniques for reducing and controlling excess inventory for manufacturing industries. It uses a case study approach to investigate the underlying causes of excess inventory, which were identified as design specification changes, wrong items being procured, bulk purchases, order changes by clients, intuitive buying, and spares not being traceable. This study's findings showed that purchases without a confirmed demand, a parked/staged fleet, changes in specification, spares take-on, and demand changes by clients account for 80% of the total excess stock, and so must be carefully reviewed. The results also show that organisations could salvage money from the excess stock if the right inventory technique were applied. The research recommends that management set up a clear demand policy that would require top management approval to procure inventory. The policy would incorporate 12-month time fences and zones to allow just-in-time delivery of inventory for immediate consumption; develop a lateral transhipment policy; and adopt a management toolkit to dispose of excess inventory. The outcome of this study could help organisations to gain an in-depth understanding of inventory stock keeping units (SKU) in order to reduce inventory holding costs.