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Inventory Management via Attributed Inventory

by admin

One of the items we frequently run into working with manufacturing and wholesale distribution companies is the concept of attributed inventory.  More specifically, attributed inventory means that a given inventory item has a series of parameters (i.e., attributes), which further describe that item.  A very simple example that people can relate to is an item like a shoe, which would have attributes of size, color, and width. Read More…

Generally within legacy systems, manufacturers and distributors have fully described their inventory at a SKU level where every applicable combination and permutation of the product and associated attributes are specified for each given SKU.  Some may have decided to use intelligent part numbers in conjunction with this approach where their product ID might be SHOE-BLACK-12-EE for a black size 12EE shoe.

Alternatively, the manufacturer or distributor may decide to leverage attributed inventory within a strong ERP software solution.  In this case, the same product as above would have attributes defined as Color, Size, and Width.  Therefore, the product noted above would be SHOE with attributes of Color = Black, Size = 12, Width = EE.

While there are numerous ramifications to using attributed inventory rather than merely specifying product numbers for various combinations and permutations of items, one of the main advantages that can be managed easily with attributes is customer pricing.  As a simple example using the product of SHOE, if the standard pricing for a pair of shoes were $79.00 for all widths except EE for which there was an additional charge of $5.00 per pair, then pricing could be setup such that SHOE = $79.00 with the incremental pricing for Width of EE = $5.00.

While the above is a very simple example, when products have dozens of attributes, such as a steel coil, managing the product via any other manner besides inventory attributes would be impossible.  For example, one might specify the inside diameter, outside diameter, width, tolerance, etc. for the coil.

Even in cases where there are relatively simple products with a limited number of attributes, when companies embed the product configuration into intelligent part numbers they rarely are as straight forward as the example above – SHOE-BLACK-12-EE.  Instead, the coding process might be 1254-1C6, where the shoe is product “1254” with the next “1” meaning black, the “C” meaning “12,” and the “6” indicating “EE.”  The challenge is that using this type of part number is only passed along within the given organization via tribal knowledge, where employees only know the methodology through years of exposure.  This type of process makes it nearly impossible to easily train new employees to understand the company’s intelligent part numbering methodology.

Strong inventory management systems, such as TGI’s Enterprise 21 ERP, enable manufacturers and distributors to manage products in their preferred manner including via attributed inventory.  By using attributed inventory, these organizations make it much easier for personnel to perform sales, customer service, inventory management, and warehouse management functions rather than relying on an antiquated intelligent part numbering methodology.