FSN Analysis is part of Inventory Management in Logistics and Supply Chain Management System. In the case of spare parts management in inventory it is necessary to analyze the data based on several parameters such as the rate of issuing of spare parts, amount consumed annually, lead time, the price of single unit etc. The analysis is important because of the reason that controlling the inventory might not be same for all parts. Inventory control allows selectively controlling the number of items in stock.
Industries remain unique and selective when deploying methods to optimize inventory management process, as this debate shall examine the ‘pitfalls’ and ‘merit’s in selecting an appropriate technique that includes FSN analysis as one of the key variables responsible for driving efficiency across an organizational supply chain.
Over the years prioritized ABC that forms a core aspect of FSN Matrix has added value in integrating routine practices to rationalize resources, eliminate out-of-stock and over-stocking situations to achieve effective inventory management. As such the practice of inventory management involves stepping up co-ordination between purchasing, manufacturing, distribution functions to safeguard the structured and planned course of production thereby meeting marketing requirements and organizational objectives of deploying technology, efficient logistics and managing replenished lead times
Most of the industries are facing extreme volatility and the impact of macro-economic turbulence affecting demand/supply conditions, business needs to respond and re-act swiftly as the role of inventory management is to promote growth, profitability, performance, but it also involves goods and demand forecasting, ascertaining the carrying inventory costs, inventory valuation, future inventory price forecasting, quality management.
Quality Management generally runs with a combination of (ABC – VED) analysis that offers immediate understanding when exerting control on material supplies. While EOQ drives the inventory managers with decisions leading to optimal purchase criteria by factoring and deduct operating costs. EOQ models may be altered when performing inventory system analysis to check – continuous demand, lead time, fixed order per cost order etc., as the goal of an FSN Analysis to track and monitor fast moving, slow moving and non-moving items, while ABC & VED Analysis are useful when deploying strict financial control by eliminating out-of-stock situations. It must be noted that VED analysis is generally applied to non-moving items.
The following are the major inventory analysis tools used in the industry
(1) FSN Analysis
(2) ABC Analysis
(3) VED Analysis
(4) SDE Analysis
(5) HML Analysis
Usual classification of Items at Inventory can be classified based on the following criteria
Fast Moving – Items which are frequently issued from inventory which are more than once for a specific time period
Slow Moving – Items which are less frequently issued which might be once in a specific time period
Non-Moving – Items which are not issued from the inventory at all in a specific time period
The FSN classification system is extremely helpful in distributing spare parts which are kept near the dispensing are having items which belong to the fast-moving category. The items which fall into the non-moving category can be discontinued if the further scope of use is not expected. As companies in production for a longer period have a specific percentage of non-moving spare parts which are usually disposed at regular intervals. Selling the spare parts or reusing the same can be again in the capital which can be used for other uses.
Eventually the difference between applying ABC & FSN Analysis shall vary as per the priority of each item in the matrix above to develop a robust EOQ model
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