Actions Should Manoharan Take to Reduce Inventory Cost by 10 %

 Reduce lead time

This will allow a downward adjustment of safety stocks, and an improvement in availability. If supplier lead times can be reduced to below the required lead time to the customer, this will remove the requirement to hold stock altogether. Having lead time should reduce safety stocks by about 30% for the same availability.

 Improve reliability of supply

Unreliable supply is one of the reasons for holding safety stocks: if delivery is guaranteed on the due date then safety stock can be reduced to that needed to cover common-cause variability of demand.

 Order more frequently

Order little and often: this reduces the cycle stock. Ordering twice as often will have the cycle stock. There is a cost: each order comes with an administration overhead and a labour cost to receive the goods. The former can be mitigated with automation and management by exception.

 Eliminate obsolete stock

If there is obsolete stock in your warehouse get it off and use that space for some productive inventory

 Centralize your inventory

In total, distributed warehouses require more inventory than centralized facilities. The key driver of the increased inventory is safety stock. The rule of thumb is: As the number of facilities increase, the amount of safety stock increases by the square root of the facility increase. Increasing facilities by a factor of four will increase safety stock by a factor of two.

If centralization is possible, a reduction in order quantities may be possible. By ordering to only one location, you may be able to increase your order frequency, thus lowering your overall order quantity.