Inventory Reduction Strategies

18 Targeted Inventory Reduction Strategies for Supply Chain Professionals

Inventory comprises an important part of current assets, particularly in manufacturing industry. A lot of cash flow is committed to inventories so as to ensure a smooth flow of production to meet a demanding customer service level. However, maintaining inventory also involves holding or carrying costs along with opportunity cost. Therefore, identifying inventory reduction strategies becomes critical for supply chain and operations professionals.   Inventory management therefore plays a crucial role in balancing the benefits and disadvantages associated with holding inventory. Efficient and effective inventory reduction strategies go a long way in the successful running and survival of a business firm. As Apple CEO Tim Cook says:   Here is […]

Vendor Managed Inventory (VMI)

Vendor Managed Inventory : A Step-by-Step Guide, Benefits and Risks

Given the disruptive nature of the supply chain dynamics, an important aspect of supply chain planning and control is the attempt by supply chain managers to improve supply chain performance. One way of avoiding this is to allow an upstream supplier to manage the inventories of its downstream customer. This is commonly known as vendor managed inventory (VMI). Vendor managed inventory (VMI) is a supply chain initiative where the supplier is authorized to manage inventories of agreed-upon stock-keeping units at customer locations. The benefits of Vendor managed inventory (VMI) are well recognised by successful retail businesses such as Wal-Mart. In […]

inventory management and control

How to Develop Traffic Light Inventory Management and Control Report in Excel to Reduce Stock Outs

Please raise your hand if you’ve ever panicked when your boss asked the question how many items are Out of Stock from Made to Stock list? Or How many items we are carrying too much excess stock? And it is not unusual that your boss wants this information in next 5 minutes! This is where inventory management and control report comes into play. Just to clear one point from start, I am not talking about inventory management and control reporting system from warehouse physical inventory control perspective but I am talking about inventory management and control report from a  planning/management […]

Safety Stock Formula

6 Safety Stock Formulas You Can Consider in Your Next Calculation Cycle

Safety stock is a term used to describe the additional quantities of stock held by a company to mitigate the risk of running out of stock. This therefore acts as a buffer in case the supply and demand are different to what was planned or forecasted. There are many ways in which to calculate safety stock and there are plenty of Safety Stock Formulas available which you could use. Below we will go through 6 different Safety Stock formula definitions to get a comprehensive figure for safety stock. At the end we’ve given you a ‘bonus track’ of EOQ calculation! […]

Importance of Demand Forecasting

Importance of Demand Forecasting in Supply Chain- 9 Authentic Reasons

The importance of demand forecasting has been topic of discussion in economics and valuable books have been written on it over the years. However, within the supply chain context there are three types of forecasting, which are: Demand Forecasting: This is the investigation of the companies demand for an item or SKU, to include current and projected demand by industry and product end use. Supply Forecasting: Is a collection of data about the current producers and suppliers & technological and political trends that might affect supply. Price Forecast: This is based on information gathered and analyzed about demand and supply. […]