Industries remain specific and selective when applying approaches to improve inventory management processes. Analysing these in-depth will help understand the obstacles and value’s in choosing an effective methodology that involves FSN category as one of the primary variables responsible for driving productivity across an organizational supply chain.
The FSN category is based on the level of problem or use of spare parts and the F, S and N alphabets are Fast Moving, Slow Moving and Non Moving products. The FSN classification system categorizes the items based on how often the goods are released and how often they are used. FSN in inventory management analyses that deals with the use, consumption level and quantity-based identification of items.
The standard inventory classification of goods can be categorized according to the following criteria
- Fast moving: products that are often distributed from inventories multiple times, in a specific period.
- Slow-moving: products that are distributed less regularly and may be released once in a specific period of time.
- Non-moving: products that are not released or hardly released in a specific period of time from the inventory.
This categorization helps the spare parts management team to set up the most appropriate store layout by locating all fast moving items near the dispenser window to reduce the handling effort. In addition, the management’s attention gets to non-moving items that helps to decide whether selling of non-moving spare parts, or recycling spare parts need to be effected.
The evaluation of the FSN is normally performed on the following basis:
- The last date of delivery of goods or the last date of issue of goods, whichever is later, shall be taken into account.
- The time span is usually calculated in terms of months or number of days and refers to the time elapsed when the last movement has been registered.
Procedure of FSN category
The FSN category comprises of the following simple paths:
- Prepare product list and measure unit costs, annual demand, annual use and organize items by order.
- Calculate the annual demand percentage and average annual demand percentage.
- Inventory classification in categories F, S & N.
- FSN Classification of materials based on average stay in the inventory.
- FSN Classification of the material based on consumption rate, finally classifying based on above FSN analysis.
Researches shows that 15+year-old industries have more than 60% of the inventory as non-moving spare parts.