A monthly routine that connects service, cash and supply risk.
Beginner-friendly animated guide
Learn Run a useful inventory review from the beginning
A monthly routine that connects service, cash and supply risk. Use the controls to study one section at a time. No previous warehouse knowledge is required.
Agree whether the review should reduce shortages, release cash or manage supplier risk. These aims may conflict. Freeze the reporting date, exclude consignment stock consistently and reconcile inventory value to the same costing basis used for consumption.
Worked example
A site has ₹30 lakh average stock and ₹10 lakh monthly COGS. Period turns are 10 ÷ 30 = 0.333. With 30 days in the period, days on hand are 30 ÷ 10 × 30 = 90. This is not 0.333 annual turns; annualization needs a representative period and explicit assumptions.
Review the exceptions
Export ABC–XYZ classes, then add criticality, expiry risk, supplier lead time and open orders. A cheap critical spare can deserve more protection than a high-value optional item. Assign each exception an owner, action, due date and evidence needed to close it.
Use the result
For shortages, investigate unavailable versus inaccurate stock before increasing buffers. For excess, check committed demand and cancellation rights before cutting orders. Compare the next review with the same definitions.
Inventory value rises while service remains unchanged and ageing stock is hidden inside the total. The useful response is not a generic target or a tick-box answer. Start by defining the exact event, location, item, time period and decision owner so that another reviewer can reproduce what happened.
Decision path
Review service, turns, ageing, excess and shortages together; assign named actions at SKU or policy level. Record assumptions before changing the process. Compare the proposed control with the current condition, test it on a limited scope where appropriate, and define the condition that would require work to stop or management to escalate.
Evidence pack
Reconciled stock value, ageing bands, demand history, open supply, exceptions, owner and financial impact. Keep the source record with the action rather than copying only a summary into a presentation. A complete pack should show who reviewed the information, what was excluded, the date of the decision and proof that the action was later checked.
Supervisor walkthrough
Observe the work at the location and ask the operator to explain the normal sequence.
Compare the observed sequence with the written standard and system record.
Separate an isolated exception from a repeated condition by checking recent history.
Agree one immediate control and one corrective action with a named owner and realistic date.
Return after implementation and verify the result with evidence, not verbal confirmation.
Common failure to avoid
Do not close the review with “team advised” or “monitor closely.” Those statements do not identify a changed control, accountable owner or effectiveness check. A useful closure states what changed, where it changed, when it was checked and what result would reopen the issue.
Method and verification
This lesson is an operational decision aid. Reconcile definitions to your contracts, system fields and approved local procedure. See the calculation and evidence method.
