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Inventory Management Strategies
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*he role o( Inventory
Inventory e%ists'e$ause o( the +nitenesso(the rodu$tion and
transortation rates ,ittle.s a":I/**
Sour$ing:etermine the set o( suliers !su'$ontra$torsto 'e used4
and develo the$ontra$tsthat "ill govern the relationshi#
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Inventory Strategy
1# e$ide inventory storage andro$essing lo$ation
2# Sele$t an inventory managementsystem
3# Set u sulier agreements
5# Set u reorder oints ,and later46O7
8# Set u monitoring dash'oard
9# 6sta'lish inventory disosalro$esses
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;usiness Challenges
emand
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Strategies A Bey Considerations
Produ$t Positioning Strategi$ imortan$e o( the rodu$t to
the $omany.s revenue and margin
o'e$tives*he more imortant4 the higher the >;C
$ategory
Cometitive osition o( the rodu$tD 6g lots o( $ometition lo"er
margin
lo"er $arrying $osts
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Strategies A Bey Considerations
o" should demand variation 'ea$$ounted (or in inventory
de$isionsD o" @ui$)ly $an a $hange in suly
outut 'e a$$omlished and maintained
*he desired +ll rate or servi$e level
6%e$ted delivery lead time A hels to
esta'lish "here and "hen the 'uEermust 'e maintained
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Strategies A Bey Considerations
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Strategies A Bey Considerations
o" mu$h 'uEer inventory is neededto address suly disrution
ris)sD =hat everyday events $an disrut
sulyD ,ate deliveries4 $omonent@uality issues4 e@uiment
'rea)do"ns4Goods4 +res4 'an)rut$y4 natural
disasters Sa(ety sto$)s and dual sour$ing
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6>? and JI*
Redu$ed lead times / redu$edinventory needs and
in$reasedGe%i'ility
oes not / Hno inventory strategy
=at$h ell video
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6valuating Inventory Strategy Cost and 6Ee$tiveness
=hat haens i( my +ll rate o'e$tivere@uires an inventory level
that$auses an una$$eta'le ima$t on
$ost and $ashGo"D Re@uires suly $hain visi'ility4
modelling and simulation
Monitor (or shi(ts in demand and suly
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*o Summarise
*oo mu$h inventory "ill ima$t on $ost4 margin and$ashGo"
Poorly ositioned inventory ,too long lead times4 slo"(ul+lment
"ill ima$t on $ost and $ashGo"
*he goal is to ma%imise your oortunities "ith as littleinventory
as ossi'le#
*his re@uires a $lear understanding o(: Produ$t ositioning
Pro'a'le degrees o( demand volatility
>roriate $onsiderations (or suly disrution ris)s
=hen strategies have 'een sele$ted4 they should 'etested and
monitored using suly $hain visi'ility andsimulation tools that $an
rovide a realisti$ assessmento( their $ost and eEe$tiveness
