Inventory Management Model Based on a Stock Control System and a Kraljic Matrix to Reduce Raw Materials Inventory

Abstract

This research project proposes a supply management model in a consumer goods company in Lima, Peru, to improve stock control and avoid raw materials stockouts and overstock. A Kraljic matrix was used to identify products based on their criticality considering material segmentation, warehouse capacity and times, and ABC segmentation to classify products on each quadrant of the matrix. This project also focuses on defining purchasing and supply strategies in each quadrant of the matrix. This model involves the development of three processes that are related to a new purchasing strategy: economic order quantity, lot-for-lot ordering, and just in time. This new system is based on a more accurate inventory because continuous improvement attracts employees' attention and engages them in reducing the number of manual notifications made by operators every month. Moreover, after implementing the new procedure for recording inventories, the inventory record was 87% accurate, whereas, in the past, the inventory was not counted and was performed by employees of other areas.