What are the different types of Inventories ? Why they are required?

Answer

Due to dynamic nature of ships’s Voyage and lead time, any one Inventory management techniques may not suffice. Hence as a CE, I need to have a combination of various technique like:- 

                                ABC + VED + FSN + Reorder level.

Inventories can be classified on the basis of %cost, availability, frequency of usage onboard and Criticality-

ABC is based on annual consumption value:

Annual consumption value = Annual quantity used × Unit price

Typical classification:

• A items: small number of items, but very high annual consumption value.
• B items: moderate value and importance.
• C items: many items, but low total value.

Example: expensive purifier parts or automation modules may be A items; nuts, bolts and gaskets may be C items.

Very important onboard ships.

Classification is according to criticality:

• V – Vital: If unavailable, machinery or ship operation may stop or safety may be affected.
• E – Essential: Important, but temporary operation may still be possible.
• D – Desirable: Failure does not immediately affect safe operation.

Example:

Vital: Main engine fuel pump, critical bearing, steering gear component.

Essential: Purifier spares, auxiliary machinery components.

Desirable: Non-critical fittings or convenience items.

Based on frequency of issue or movement:

• F – Fast moving
• S – Slow moving
• N – Non-moving

It helps identify:

• Frequently used spares.
• Dead stock.
• Obsolete items.
• Items occupying unnecessary storage space.

Example: Filters and O-rings may be fast moving, while a spare from obsolete equipment may become non-moving.

Based on unit price:

• H – High cost
• M – Medium cost
• L – Low cost

This differs from ABC.

ABC considers annual consumption value.

HML considers the price of one item.

Useful for approving purchases and controlling expensive spares.

Based on availability in the market:

• S – Scarce
• D – Difficult
• E – Easily available

Very relevant to ships because spares may have long lead times.

Example: A special MAN B&W electronic module may be scarce or difficult, while standard nuts and bolts are easily available.

For scarce items, more safety stock may be required.

Generally used according to inventory value or predictability of consumption, depending on the company system.

Common interpretation:

• X: High inventory value or very predictable consumption.
• Y: Medium.
• Z: Low value or highly irregular demand.

They are required to:

• Prevent shortage of critical spares.
• Avoid excessive stock and unnecessary expenditure.
• Reduce capital tied up in inventory.
• Maintain minimum safe stock levels.
• Account for long procurement lead times.
• Avoid machinery downtime.
• Identify obsolete/non-moving spares.
• Improve purchase planning.
• Maintain accurate stock records.
• Ensure availability during emergencies and dry docking.
• Support PMS and planned maintenance.
• Reduce wastage, deterioration and expiry of stores.