Partner-optimized inventory management, also known as partnerized inventory management or sometimes just the abbreviation PIM is an

inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shap ...

management technique or model often used in

deterministic Determinism is a philosophical view, where all events are determined completely by previously existing causes. Deterministic theories throughout the history of philosophy have developed from diverse and sometimes overlapping motives and consi ...

inventory systems in which a significant portion of the total inventory regularly becomes

stochastic Stochastic (, ) refers to the property of being well described by a random probability distribution. Although stochasticity and randomness are distinct in that the former refers to a modeling approach and the latter refers to phenomena themselv ...

in nature, due to slowing and/or low demand such as is typical in heavy machinery and construction equipment where the products themselves are extremely durable and have long lives in the field. Inventory in these cases needs to be maintained for an extended time to allow for repairs and product support perhaps as much as two or more decades after a manufacturer has ceased production. Traditional inventory management techniques break down in cases where a manufacturer maintains inventory to supply future maintenance of their in-service equipment. As demand for

goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not tran ...

approaches zero, liquidation of inventory is indicated in most

revenue management Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro-market levels and optimize product availability, leveraging price elasticity to maximize revenue growth and thereby, profit. The primary ...

models. Zero inventory to service products in the field, however, fails the organization in other business areas. Possible costs to manufacture replacement inventory and the harder-to-calculate costs of customer confidence erosion can be greater over time than the immediate financial concerns that are remedied by liquidating inventory entirely by

scrap Scrap consists of Recycling, recyclable materials, usually metals, left over from product manufacturing and consumption, such as parts of vehicles, building supplies, and surplus materials. Unlike waste, scrap Waste valorization, has monetary ...

ping or discarding it as

waste Waste (or wastes) are unwanted or unusable materials. Waste is any substance discarded after primary use, or is worthless, defective and of no use. A by-product, by contrast is a joint product of relatively minor economic value. A waste prod ...

. While scrapping returns inventory to a state of raw materials, Partner-Optimized Inventory Management (PIM) returns inventory to the market as

intermediate good Intermediate goods, producer goods or semi-finished products are goods, such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or make and then sell, o ...

s to be used in production of other goods or non-capital

spare part A spare part, spare, service part, repair part, or replacement part, is an interchangeable part that is kept in an inventory and used for the repair or refurbishment of defective equipment/units. Spare parts are an important feature of logistic ...

s. An organization that uses the PIM model mitigates the immediate pinch point caused by inventory reduction by retaining as-needed mutual access to inventory through the marketplace for an indeterminate time rather than losing access immediately and irrevocably through scrapping or discarding the inventory as waste.

See also

References

Further reading