Optimized inventories - internally and along the chain: The supply chain is effectively a string of buffers. Although a lot of emphasis and efforts are on the dynamic side - processing of goods, transport, shipments - effectively goods wait most of the times for a next activity Waiting time for the next activitiy can follow different objectives which need to be defined: Safety stocks, collecting for critical mass, waiting for the right time to be used (e.g. in cycle stock), presentation to customers, defending shelf space … One of the key drivers of success in inventory optimization is to know the purpose of the inventory, and the speed and likelyhood for the item to be consumed
Buffers to compensate variability CAPACITY TIME INVENTORY Capacity Flexibility : • SMED - Principles • Technology  flexibility • Best fit  production order • Appropriate choice of  Economies of  Scale /  Flexibility /  Adaptability per  line • APS  for change - over optimized sequence • Smart  leverage from outsourcing Use of Forecasts  to „ buy “ time: • Good forecast to prepare early • Bad  forecast needs other buffers • Sharing  good forecast along the chain helps everyone to better prepare ,  and take buffer out • Forecast  quality horizons need to match individual  component lead times • Appropriate granularity level to get significance Intelligent  Inventories : • Postponement techniques for final  outfit • Global  visibility of  stocks ( storage ,  transit ) • Progress  monitoring ( value add track &  trace ) • Internal SMI of semi - finished products • Risk - based pre - production • Multi - Echelon  inventory management • Component knows where it belongs Ability to predict Customers Availability Risk Suppliers Production &  Quality Ability to produce Inventories Inventories Inventories Inventories Inventories Inventories Inventories Inventories Inventories
The supply chain acts like a string of buffers. Most of them are inventories. Inventories have become a normal part of running, operating, and synchronizing a supply chain. Goods wait most of the times for a next activity. Which sometimes never comes… But does it need to be like this? We think, sometimes no, but sometimes yes. It is more a question of the purpose… and then the alignment needs to be worked on…
Enablers Safety Cycle Forecast Collaboration Production Flexibility Inventory  levels Ordering  Strategies Inventory  locations Supply Reliability Order Point Order frequency At supplier / factory Hedge Customer Collaboration Service  Levels Stock - out probability Order Fill Rate Buffer By geography Inventory  Management Central hub Strategies
A systematic analysis of the nature of the inventories, and enablers for improved inventory, is the starting point to understand levers to influence. But there are three more levels to go through to really address the foundation of successful inventories..