Have you seen the adaptation happening around you? Just open your eyes and you'll see it.
The dynamic of inventory management is shifting. Companies are evolving as they adapt to the changing economic and business environment. Those that are embracing the evolution are seeing a competitive advantage; while those that are holding onto the past inventory management practices are falling victim to natural selection.
Inventory reduction was highlighted as an area ripe with supply chain cost reduction opportunities during the recession. And now, as companies begin gaining momentum, it is more important than ever to maintain the right mix of inventory.
However, it's not just about cost savings; Companies also need to maintain high customer service levels. Really, world-class inventory management involves the organization as a whole.
A new white paper that I recently co-authored with inventory expert and Tompkins Associates' Principal Ralph Cox delves deeply into this topic. The Evolution to World-Class Inventory Management stresses the cost-effective integration of people, business processes and enabling technologies all aligned with the firm's business and operating strategies.
Achieving world-class inventory management is not something you can achieve by resting on your laurels. It requires a three-fold approach:
*Inventory Optimization, in which textbook approaches to scientific inventory management are applied;
*Sales, Inventory & Operations Planning, in which conflicts in priorities are addressed formally and solid, timely decision-making processes are developed; and
*Supply Chain-Oriented Product Development, in which the product development process is specifically oriented to operations and the supply chain capabilities are leveraged.
And while some level of function exists simultaneously in these areas, within most companies, managing inventory in a world-class manner will proceed sequentially through these areas. At every stage, the twin goals are the same; the difference lies in the breadth of the approach and the range of groups involved.
As most organizations won't have the inventory to cushion any potential disruptions, it is essential to have the right processes in place to reach world-class inventory management.
To learn more, check out our new Evolution to World-Class Inventory Management White Paper.