If your inventory jumps every time a shipment arrives and then bleeds down until the next one, you’re looking at the inventory sawtooth. It’s the up-and-down pattern that shows up whenever you replenish stock in batches rather than continuously. It isn’t a flaw in your operation. It’s simply what happens between orders. But when the swings get too wide, you’re carrying more cash in inventory than you need to.
An Inventory Planning system can help by constantly reviewing your positions and shortening how long it takes you to react. But you don’t need new software to manage your inventory sawtooth better. Waypost’s supply chain consulting services help market-leading enterprises build and manage the kind of efficient supply chains that hold their shape under pressure.
The Inventory Sawtooth Pattern, Explained
Picture your inventory level over time: it spikes when a shipment arrives, then declines steadily as you sell or consume it, then spikes again at the next delivery. That repeating peak-and-valley shape is the inventory sawtooth, and it’s the same curve behind the classic economic order quantity (EOQ) inventory model.
The height and width of your sawtooth come down to how long it takes to replenish stock and how often you review your positions. Shorten either one, and you shrink the sawtooth. That means less cash tied up in inventory you’re not using yet.
What Drives the Shape of Your Inventory Sawtooth
A handful of factors determine how steep and how wide your inventory sawtooth runs:
- Cycle service level (the percentage of orders that ship on time and in full)
- Replenishment lead time, from PO placement to inventory receipt
- Variability in that lead time, driven by vendor performance, transportation times, and warehouse handling times
- Demand forecast accuracy
- Demand variability
- How often you review your inventory positions
- Purchase quantity requirements, such as minimum order quantities or order multiples
- Your safety stock method
- Your broader network strategy
Total replenishment lead time breaks down into four pieces: the vendor’s required order lead time, transit time to your warehouse, warehouse turn time to receive and shelve the product, and your inventory review interval. That last one matters most because it’s the easiest lever to pull. Review your positions every two weeks instead of monthly, and you can typically cut two weeks out of the inventory you need to carry. No new system required.
How Supply Chain Consultants Flatten the Curve
Supply chain consultants work alongside your team to analyze inventory levels and turnover rates, spot where your inventory sawtooth is running wider than it needs to, and close the gap. That typically looks like:
- Right-sizing safety stock and review cycles. Tightening your review interval and safety stock method directly narrows the sawtooth.
- Improving forecast accuracy. Better demand forecasting keeps your replenishment quantities aligned with what you actually need.
- Integrating inventory management with the rest of your supply chain. Inventory decisions made in isolation from logistics and distribution tend to make the sawtooth worse, not better.
Engagement-dependent, clients who tighten these levers typically see a 9-17% improvement in inventory-related costs, without adding headcount or new software.
Working with a supply chain consulting firm also brings broader benefits: improved efficiency and lower costs, stronger customer satisfaction from more reliable deliveries, faster response to shifting demand, better risk management, and access to expertise your team may not have in-house.
Get Help Managing Your Inventory Sawtooth
Our advisors can help you navigate inventory management in the way that fits your business, and help you implement the systems to do it even better, whether or not your inventory sawtooth currently makes you smile.
For more on how we’ve helped clients make a meaningful impact on their inventory, check out our case study, “Inventory Optimization for Improved Working Capital and Service Levels.”
Contact us at info@waypostadvisors.com or send us a message.
