Virtues of Virtual: Tracking Virtual Inventory
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Managing reusable containers when you don’t control every node in the supply chain can present a challenge. You’re often at the mercy of suppliers or third-party logistics companies who are content to do the least work required of them, and could care less about your best practices if it increases their workload.

This challenge can be overcome by using serialized tracking techniques in locations you control, and bulk tracking techniques where you can’t.

If suppliers aren’t interested in capturing serialized data, have them simply send the type and quantity of reusables used per shipment. This non-serialized data, or “bulk” data, still has value: it can be used to show you how many containers that supplier has on hand, and how many they are still responsible for. The loss of serial-level accountability can be overcome by creating these two inventory levels: “Virtual” and “Responsible” inventory.

Virtual Inventory is your best estimation of the current inventory levels at the supplier (bulk data).

Responsible Inventory is the inventory that the supplier is still responsible for until it shows up on your grid somewhere else (serialized data).

Three inputs are related to this inventory transaction:

Inventory Sent: the serialized inventory sent to your supplier, about which you know the type, quantity, and date each reusable was sent.

Inventory Returned: the number of reusables the supplier claims they returned to you.

Actual Inventory Returned: the serialized containers that were sent from the supplier that have subsequently show up at some point in your process.

Using the follow two simple equations you can determine your suppliers Virtual and Responsible inventory levels:

Virtual Inventory Levels = Inventory Sent (Quantity) – Inventory Returned (Quantity)

Responsible Inventory Levels = Inventory SentActual Inventory Received Back 

Keeping tabs on the inventory levels of uncontrolled locations can produce significant savings, particularly if your goal is to reduce the dwell time of reusables at these locations, then reduce the number of reusables in the supply chain loop. Defining your variables and following these two simple equations gives you access to data that would otherwise be beyond your reach.

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