Supply Chain Consultant Insights: Does Your Inventory Sawtooth Make You Smile?

Some of the levers that drive inventory levels and management are easier to pull than others. An Inventory Planning system is certainly helpful because it constantly reviews your positions, effectively driving-out the review cycle time.

But an Inventory Planning system isn’t required to manage your inventory better. Our expertise in supply chain consulting includes related services that assist market-leading enterprises in developing and managing efficient supply chains that enhance performance and deliver value.

Understanding Supply Chain Consultants

Supply chain consultants are the unsung heroes behind the scenes, ensuring that your supply chain operations run like a well-oiled machine. These specialized experts bring a wealth of knowledge and experience to the table, helping organizations achieve operational excellence, reduce costs, and boost efficiency. By analyzing and coordinating the logistical functions of a firm, they work closely with suppliers, manufacturers, and customers to streamline processes and enhance performance.

With their deep understanding of supply chain management, supply chain consultants identify areas ripe for improvement, develop and implement process enhancements, and keep a close eye on key performance indicators (KPIs) to ensure continuous progress. Their goal is to create a seamless, efficient supply chain that supports your business objectives and drives success.

The Key Factors of Supply Chain Inventory Management

The key factors of your inventory management needs are generally related to the following:

Cycle Service Level (% of time an order ships on-time/in-full)
Replenishment Leadtimes (PO placement to Inventory Receipt)
Variability in Replenishment Leadtimes
- Vendor Performance
- Transportation Times
- Warehouse Handling Times
Demand Forecast
Demand Variability
Frequency of Inventory Review
Purchase Quantity Requirements (Minimum Order Quantity, Order Multiple, etc)
Safety Stock Method
Network Strategies

The Benefits of Supply Chain Consulting

Partnering with a supply chain consulting firm can unlock a treasure trove of benefits for your organization. Here are some of the key advantages:

Improved Efficiency and Reduced Costs: Streamlined processes and optimized operations lead to significant cost savings and enhanced efficiency.
Enhanced Customer Satisfaction and Loyalty: A well-managed supply chain ensures timely deliveries and high-quality products, keeping customers happy and loyal.
Increased Agility and Responsiveness: Stay ahead of the curve by quickly adapting to changing market conditions and customer demands.
Better Risk Management and Mitigation: Proactive risk management strategies help you navigate uncertainties and minimize disruptions.
Integration of Sustainability: Incorporate sustainable practices into your supply chain operations, contributing to social responsibility and environmental stewardship.
Access to Specialized Expertise: Leverage the knowledge and best practices of seasoned supply chain consultants to drive continuous improvement.
Significant Improvements in Supply Chain Resilience: Build a robust supply chain capable of withstanding shocks and disruptions.
Leveraging Digital Technologies: Harness the power of digital technologies, such as artificial intelligence and data analytics, to make informed decisions and stay competitive.

By tapping into the expertise of a supply chain consulting firm, you can gain a competitive advantage, drive profitable growth, and achieve operational excellence.

The Factors of Supply Chain Replenishment Lead Time

The parameters and factors of inventory management can all be measured and used for a more statistically-driven approach.

Let's talk about Total Replenishment Lead Time, which includes:

Vendor's Required Order Lead Time: From the time you place a PO to the time the product is available for them to ship
Transit Time: From the time the product is ready to ship from the vendor to the moment it arrives at your warehouse
Warehouse Turn Time: How long it takes the warehouse to receive your product, put it away, and enter it into the system for shipment to your customers
AND Your Inventory Review Interval: This one is important because it's one of the easier parameters to change. If you review your inventory positions (by product) each month, you can drop your inventory needs by 2 weeks if you review them every 2 weeks.

The Inventory Sawtooth Pattern

The behavior of your inventory, over time, creates the aptly-named “Inventory Sawtooth”.

In the example graphs above you can see how reducing the Replenishment Lead Time can drop your overall inventory needs.

Note: This is a simple sawtooth pattern example for illustrative purposes – the actual ability to reduce inventory depends on many factors of inventory management.

The Role of Inventory Management in Supply Chain Consulting

Inventory management is the backbone of a well-functioning supply chain, ensuring that the right products are available at the right time and in the right quantities. Supply chain consultants play a pivotal role in optimizing inventory management processes, helping organizations strike the perfect balance between supply and demand.

Here’s how they do it:

Analyzing Inventory Levels and Turnover Rates: By closely monitoring inventory levels and turnover rates, consultants can identify inefficiencies and areas for improvement.
Developing and Implementing Inventory Management Strategies: Tailored strategies, such as just-in-time (JIT) and vendor-managed inventory (VMI), help reduce excess inventory and improve cash flow.
Improving Forecast Accuracy and Demand Planning: Accurate demand forecasting is crucial for maintaining optimal inventory levels. Consultants use advanced techniques and tools to enhance forecast accuracy.
Integrating Inventory Management with Other Supply Chain Functions: A holistic approach ensures that inventory management is seamlessly integrated with logistics, distribution, and other supply chain functions.

Optimizing inventory management not only reduces costs but also improves service levels and boosts overall supply chain efficiency. With the guidance of supply chain consultants, organizations can achieve significant improvements in their inventory management practices, leading to a more resilient and responsive supply chain.

Help With Better Inventory Management and Supply Chain Resilience

Our Advisors can help you navigate the landscape of inventory management in the ways that work best for your business, and help you implement systems to do it even better. Consulting firms can provide the expertise needed to enhance your inventory management strategies.

For more information on inventory management practices and how we’ve helped clients make meaningful impacts in their business, check out our case study: “Inventory: Not Just A Feeling.”