Inventory Optimisation
Organisations have various levels of inventory, affected by the nature of their supply chain. But the risk issues tend to be common- forecast error, supply lead time variability, length of the review period, order quantity calculations.
Also common is over-reliance on averages. Why waste cash flow on inventory which doesn’t improve customer service or profitability?
Often companies concentrate only on forecasting, which can mean a dangerous loss of focus.
Traditional inventory management systems cater for the replenishment of line items, but cannot model different scenarios and incorporate changes quickly and easily.
The performance measurements which need to be addressed are-
- Stock holding
- Stock availability
- Lost sales
- Customer satisfaction
- Forecast accuracy
- Obsolescence and write-offs.
Sales & Operations Planning has evolved to become an inter-organisational synchronisation process, specifically through information sharing. Some of the most critical information to share is the inventory position, and how it differs from the planned and the ideal position.
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