Five Ways to Tame the Tricky Task of Managing Inventory
With the world’s supply chains in crisis, having predictable and reliable inventory levels has become a herculean task. One of the largest contributing factors to this is the complex system of suppliers companies now use, with many using multiple providers and receiving thousands of items.
When a link in this interconnected chain breaks, as has been highlighted by the turmoil of the past two years, how do you recover? How do you turn unpredictable supplier performance into predictable results? How do you insure you don’t have too much or too little of the goods your customers want?
The most competitive companies answer these questions by not solely focusing on making better forecasts, but by concentrating on placing orders at the perfect time, as well as for the perfect amount. They do this because they have used their resources to manage inventory and forecasting levels with exquisite detail and care, allowing them to set realistic goals which can be tweaked at a moment’s notice if necessary.
To be a competitive company, and to stay there, what methods and policies should you implement? In this article, we discuss how to:
- Manage supplier risk.
- Manage forecasting risk.
- Measure the capital you’re investing in safety stock.
- Watch out for stockouts.
- Be willing to cancel an order.
