Inventory Optimization

Challenge:

Forecast variability is one of the major concerns due to change in consumer pattern, O2O platform and challenges in the complex processes or the ways of working of an organization. So inventory replenishment is one of the key challenges to meet the demand.

Objective:

To optimize overall inventory and production across entire primary supply chain distribution network and reduce inventory-holding and distribution costs.

Findings:

My supply chain planning experience has taught me that companies are carrying far more inventory than they actually need to meet their service level targets. This is because supply chain planners are battling inventory on one or more fronts:

• They face a plenty of SKUs and optimizing inventory for each SKU is challenging
• They face a complex distribution network and optimizing inventory for each location is challenging
• They face significant demand variability and optimizing inventory for the right time is challenging

Analysis:Supply Chain Solutions as follows fall short of inventory optimization.

• They provide software and services that have nothing to do with inventory optimization, e.g. ERPs and warehouse management systems (WMS)
• They propose textbook formulas for Safety Stock setting or Economic Order Quantity calculations, with no optimization
• They suggest “best practices” for inventory planning…