12 Ways to Reduce Inventories

Reducing demand variability and improving forecast accuracy are top strategies to reduceing inventories.

Inventory takes on a lot of different identities within a manufacturing company, depending on who's doing the looking. An accountant sees inventory as an asset, a controller sees it as a liability, a production supervisor considers it a safety net, while a materials manager finds it a tightrope. One common aspect to inventory, though, is that everybody agrees that holding it can be costly. The following are a dozen ways to reduce inventory, suggested by supply chain consulting firm Cornerstone Solutions:

  1. Reduce demand variability
  2. Improve forecast accuracy
  3. Re-examine service levels
  4. Address capacity issues
  5. Reduce order sizes
  6. Reduce manufacturing lot sizes
  7. Reduce supplier lead times
  8. Reduce manufacturing lead times
  9. Improve supply reliability
  10. Reconfigure the supply chain
  11. Reduce the number of items
  12. Eliminate questionable practices

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