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

inventory Inventory (British English) or stock (American English) is a quantity of 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 ...

management technique or model often used in

deterministic Determinism is the metaphysical view that all events within the universe (or multiverse) can occur only in one possible way. Deterministic theories throughout the history of philosophy have developed from diverse and sometimes overlapping mo ...

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

stochastic Stochastic (; ) is the property of being well-described by a random probability distribution. ''Stochasticity'' and ''randomness'' are technically distinct concepts: the former refers to a modeling approach, while the latter describes phenomena; i ...

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 anything that is good, usually in the sense that it provides welfare or utility to someone. Alan V. Deardorff, 2006. ''Terms Of Trade: Glossary of International Economics'', World Scientific. Online version: Deardorffs ...

approaches zero, liquidation of inventory is indicated in most

revenue management Revenue management (RM) is a discipline to maximize profit by optimizing rate (ADR) and occupancy (Occ). In its day to day application the maximization of Revenue per Available Room (RevPAR) is paramount. It is seen by some as synonymous with ...

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 recyclable materials, usually metals, left over from product manufacturing and consumption, such as parts of vehicles, building supplies, and surplus materials. Unlike waste, scrap can have monetary value, especially recover ...

ping or discarding it as

waste Waste 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 Value (economics), economic value. A wast ...

. 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 Good (economics), 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 mak ...

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 (electronics), refurbishment of defective equipment/units. Spare parts are an i ...

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