3 Strategies for Optimizing Industrial Products Inventory
Treading the fine line between achieving high fill rates and carrying unsold stock that erodes your margins takes its toll on any business. Add the complications of fast-changing customer demands and intensifying competition and the fine line gets even thinner.
For most midsize businesses, the opportunities to become more efficient and profitable exceed the capital and staffing needed to make that happen. But there are ready-made and configurable solutions today that can bring you closer to your goals—faster, and often with less capital outlay.
1. Get a Better View of Your Supply Chain
Expanding your view of inventory beyond your warehouse—inbound and outbound—might be easier than you think. If your operation is using your transportation provider’s global shipping application, you may be underutilizing its potential.
“There are tools that can help companies get a broader view of their supply chain so they can anticipate when they’re at risk of falling short of needed inventory, or to see supply chain hotspots that need to be addressed,” says Simon Bhadra, Senior Manager of UPS Industrial Products Segment Marketing.
Bhadra provides an example of UPS WorldShip® shipping global application when used with UPS Quantum View® visibility services. “It’s possible to connect your team members and suppliers, and even your customers, to get everyone working from the same information.”
2. Tap into Existing Infrastructure and Services
Just as shared services such as cloud computing and software-as-a-service have helped smaller companies compete with their larger peers, there are a growing number of on-demand services that can help level the playing field for midsize and smaller businesses.
Contract Warehousing, Distribution or Fulfillment—Say your customer wants faster turnaround on a high-volume delivery to a certain location, yet the facility is difficult to reach within the timeframe of your service-level agreement. In certain cases, it makes better financial sense to position the product closer to the point of need. But instead of building out a warehouse, you might make contract arrangements with a third-party logistics provider to handle site selection, warehousing and even order fulfillment.
Dan Gagnon, Vice President of UPS Global Logistics and Distribution, notes that UPS operates over 900 field stocking locations globally. “These locations are positioned so they can provide same day or next day delivery to meet urgent service demands of our industrial, healthcare, high-tech and e-commerce customers.” He adds, “And we can often provide more advanced technology and inventory management expertise than most companies can maintain in-house.”
Local Drop-off and Pickup Points—Those who employ technicians, or who supply products to them, know that “trunk stock”—products carried by technicians or sales reps just in case—wreaks havoc on inventory management. Not only does the part or product disappear from view, it’s more likely to end up on the books as obsolete or dead stock.
Bhadra suggests that suppliers might reduce just-in-case stock by enabling technicians to pick up parts or products at a location or time most convenient to them, such as through the UPS Access Point™ network of 22,000 local businesses across North America and Europe.
Says Bhadra, “You can incorporate UPS Access Point network locations as a delivery option at checkout so buyers can select their preferred location, and then get emails or texts when their packages are ready for pickup.” He adds, “Local UPS Access Point locations aren’t a panacea for inventory control, but they can be an important part of a more efficient inventory management plan.”
On-Demand 3D Printing or Additive Manufacturing—The pros and cons of Additive Manufacturing, more casually called 3D Printing, are being universally debated. But one of its often overlooked pros is the potential to reduce inventory of low-demand products—often the types of products that end up as just-in-case or trunk stock.
“Today, you can transmit your part information to the Fast Radius 3D Printing Factory on the UPS Supply Chain campus in Louisville and potentially get the part delivered the next morning,” says Alan Amling, Vice President of UPS Corporate Strategy. “On-demand 3D printing has practically limitless potential for managing inventory costs.”
3. Leverage New Perspectives
Very often, simply talking through challenges with logistics providers can reveal opportunities that are relatively easy and inexpensive to address. They can also bring third parties to the table with not only a fresh perspective, but also expertise in inventory planning and management.
Says Bhadra, “Each situation is unique, but after professional inventory analysis, we’ve seen some customers reduce their inventory investment up to 30% and achieve a 10% to 50% reduction of In-Stock/Fill Rate misses.” He adds, “It’s sometimes small steps that yield the biggest improvements. But the most important step is to start the discussion.”
Sponsored by UPS.