“What’s a really quick way I can reduce my inventories without impacting my service delivery?”
No doubt some of the levers that drive inventory levels and management are easier to pull than others. An Inventory Planning system is certainly helpful because they are constantly reviewing your positions, effectively driving-out the review cycle time.
But an Inventory Planning system isn’t required to manage your inventory better.
The key factors of your inventory management needs are generally related to the following:
The parameters and factors of inventory management can all be measured and used for a more statistically-driven and scientific approach.
Let’s talk about Total Replenishment Lead Time, which includes:
Replenishment Lead Time for 4 Orders:
Replenishment Lead Time for 8 Orders:
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 drops your overall inventory needs.
In this case, the Replenishment Lead Time interval is halved, so the average inventory is halved.
Note: This is a simple sawtooth pattern example for illustrative purposes – the actual ability to reduce inventory depends on many factors of inventory management.
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.
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.”
Want to learn more about how you can drive impressive business performance at your Company?