If There’s No Uncertainty, You’re Not Managing Your Inventory

Share This on Linked In

As noted in a recent Industry Week article on Inventory Optimization that noted how it’s all about uncertainty, these days, volatility and uncertainty pummel the network of suppliers, producers, wholesalers, distributors, and retailers that convert raw material to finished products for our homes and offices. That supplier in China may ship you 100,000 units this week, but only 20,000 units next week. That shipment may take 10 days to arrive or 20. Demand can be steady for weeks, then spike or drop unexpectedly, confounding the forecasts and causing excess inventories or product shortages. There’s uncertainty everywhere, and if you’re not managing it, you’re just waiting for a disaster.

The only way to thwart the problems caused by volatility and uncertainty is to gain visibility into all the factors needed to improve inventory decisions across the supply chain. The best way to do this is to implement a multi-echelon inventory visibility and optimization solution that keeps track of inventory levels, demand changes, real-time shipment updates, and uses inventory optimization to recommend optimal updates to forecasts, inventory levels, and shipments. Such a solution can often reduce inventory by 20% to 30%, improve service levels, ad cut cycle times by 10% to 20%, especially when guided by an expert that uses the visibility to make manual adjustments as soon as new information is available.