Whole Life Asset Management (L4M7)

Module purpose
On completion of this module, learners will be able to explain methods of inventory storage and control and analyse the concept of whole life cost from concept through to disposal.

Module aim(s)
Whole life costing takes into account the total cost of a product or service over its lifetime, from concept through to disposal including purchase, hire or lease, maintenance, operation,utilities, training and disposal. Hence, it is important for those involved in the procurement and supply function to take all these elements into consideration when making decisions and comparing the costs of buying, renting or leasing equipment. In most cases the purchase costs are a small proportion of the cost of operating it. Although costly, there are numerous reasons why organisations elect to hold inventory. The management and control of such inventory is therefore vital to organisational success. This module is designed for those who will have responsibility for the whole life management of assets and enables learners to analyse methods for inventory movement and control and to analyse the concept of whole life cost.

Next steps
Joining a CIPS qualification programme means you will join the largest Institute in the world for those working in procurement and supply. You can join as a member online today. Once you've become a CIPS member you can book your examinations online.

    Learning outcomes

    1.0  Understand methods for the storage and movement of inventory

    1.1  Identify the principles, purpose and impact of stores and warehouse design

    • Location of stores and warehouses
    • Stores and warehouse design
    • Factors that influence stores and warehouse layout
    • Flow, space utilisation and flexibility

    1.2  Explain the use of product coding in inventory operations

    • Systems for product coding
    • Bar coding
    • Order tracking technologies
    • The use of RFID technologies

    1.3  Contrast the impact of the use of differentwarehousing equipment
    Approaches such as:

    • Materials handling equipment
    • Palletisation and unit loads
    • Packing and packaging
    • Environmental standards for packaging
    • The use of automation in warehousing

    2.0  Understand the key elements of effective inventory control

    2.1  Differentiate between the different classifications ofinventory

    • Opening stock, work in progress, safety stock and finished goods
    • Obsolescent and redundant stock
    • Direct and Indirect supplies
    • ABC classifications of stock that may apply
    • Dependent demand and independent demand itemsof stock

    2.2 Identify the direct and indirect costs of holding inventory

    • Acquisition costs
    • Holding costs
    • Cost of stock outs
    • Discuss options to reduce costs whilst mitigating any negative impact on service levels

    2.3 Identify techniques associated with inventory control

    • Subjective and objective forecasting
    • Re-order quantities and levels
    • MRP and MRPII
    • ERP
    • Just-in-time
    • Lean
    • Inventory performance measures – lead times, service levels, rate of stock turn, stock outs in a given period, stock cover

    3.0  Understand the concept of through life cost

    3.1  Analyse the contributing factors when establishing total cost of ownership

    • Purchase price
    • Hire or lease
    • Acquisition costs
    • Usage costs
    • Maintenance costs
    • Operation
    • Utilities
    • Training
    • Disposal and end-of-life costs

    3.2  Compare the factors to consider when building a total cost of ownership model

    • Include all costs
    • Use best estimates of values available
    • Hidden costs – global sourcing, risks associated with extended supply chain
    • Only develop for larger purchases
    • Ensure senior management support
    • Cross functional support – ensure access to data
    • Team working – reduce data collection time

    3.3 Identify the contributing elements to end-of-life costs

    • Decommissioning
    • Removal or disposal processes
    • Legal aspects – waste management
    • Environmental factors
    • Triple bottom line – people, planet, profit

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