Why Businesses Need to Dig Deeper into Inventory Optimization
Corbus supply chain experts share transformative steps for improving supply and demand planning
Product lead times have increased, causing dramatic disruptions in inventory and schedule stability and post-pandemic changes have impacted demand. Now, businesses like yours face frustrating fluctuations.
The future of supply chain optimization has to answer today’s biggest challenges: excess inventory, stock-outs and lagging on-time delivery performance.
So how can you find success amidst these hurdles?
Ongoing, effective inventory management. In these times, supply chain managers have to focus on optimization of product and raw material inventory.
Here’s the tricky part: Inventory levels at the business reporting level often look optimized and meet inventory targets. But when examining inventory at lower levels, you may reveal opportunities to improve and optimize. Let’s take a closer look at what this looks like.
Navigating supply chain turbulence
It’s critical to future-proof your supply chain — and that will require accurate demand forecasts, supply planning to meet that demand and ongoing management of inventory.
On the side of demand planning, it’s crucial to dig deeper and examine inventory at a lower level to:
- Understand demand profile at the finished good and component stock keeping unit (SKU) levels
- Refresh demand profile regularly to optimize processes and save significant inventory dollars
- Identify any SKU without demand and plan for inventory breakdown
- Investigate the finished goods and component correlation to rationalize SKUs and components appropriately
- Build a phase-in/phase-out regimented process when introducing new products and components
Organizations can also take these transformative steps to improve supply planning:
- Work closely with demand planning to create supply plans for forecasted demand
- Test forecast accuracy with monthly sales orders
- Manage supply and inventory settings, including schedule alignment to drive on-time order fulfillment and schedule stability to drive efficiency
- Adjust planning parameters to reduce the number of pull-ins and support schedule stability
- Use mathematical calculations for safety stock that account for variability, creating a balance between customer satisfaction and inventory levels
To achieve excellence, supply chain professionals must change the way they plan. Buyers need to work closely with suppliers to secure products and deliveries, while demand and supply planners have to focus on long-term stability and an optimized inventory model.
Our approach to supply chain transformation
From our 25+ years of supply chain experience, we know the importance of demand and supply planning and we’ve seen its impact.
If run effectively and efficiently, it can save businesses millions of dollars — especially in recent years when the pandemic, geopolitical issues and natural disasters have caused major disruptions in both demand and supply.
With a commitment to excellence, our supply chain experts have worked extensively with clients to drive optimization and efficiency in supply chains, in light of their present challenges and future-proofing needs.
Through expertise and collaboration, we’ve bridged gaps, solved constraints and improved process efficiency. The result? Significant business impact to clients including:
- ~80% reduction in stock-outs
- ~65% reduction in excess inventory and an optimized inventory model
- ~30% improvement in on-time delivery