Thursday, April 10, 2014

Inventory Planning 101

Inventory Planning helps ease the kinks in your supply chain pipeline.

As supply chain solutions go, this one is key. How do you determine the optimum inventory level for your products by location? Carry too much, and you tie up capital, stress your facilities, and lose the ability to react and make changes quickly. Too little, and you deal with recurring stockouts, and customers who are unhappy or turn elsewhere for their needs.

At TOTALogistix, we bring a scientific discipline to inventory planning. In the hands of our supply chain gurus, the flow and extent of inventory is statistically calculated to keep your supply chain lean while maintaining appropriate levels of safety stock and improving customer service levels. The result – carrying the right stocking levels across different products and locations, providing you insurance against surprises in supply or demand, and helping you reap the benefits of a more efficient operation.

Inventory planning addresses the inherent difficulty of knowing exactly how much of a given item will be purchased, and how fast your vendors or your plants can fill the pipeline, along with competing priorities such as sales departments that want plenty of inventory and CFOs who want to cut inventories to save capital and improve return-on-asset ratios. With uncertainty on the supply side and volatility on the demand side, this can be a challenging task. Nevertheless, with the right process, approach and tools, it is not as difficult as it sounds.

Working with a major Northeast industrial products manufacturer, we were able to increase on-time deliveries from less than 75 percent to more than 90 percent, without increasing inventory levels, through a segmented approach that resulted in modifying inventory policies by item and location. Of course, there’s a lot more to inventory planning than this quick overview can provide, but if you would like to enjoy the revenue boost and increased customer goodwill it can provide, without tying up cash, call your TOTALogistix account executive and explore it further.

Kirk Shearer
1-800-989-0054 x103

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