Inventory is a critical element to most businesses, but different functions within a business have different perceptions of how much inventory there should be. Sales tend to want large volumes of inventory to guarantee service; finance want the inventory minimised to reduce working capital, and operations want sufficient raw material to keep equipment operating efficiently. In addition, all inventories need to be of the right quality, positioned in the right place, at the right time, and in the right quantity. The difficult task of inventory management is to balance and satisfy all of these needs.
Is your inventory optimised?
All too often companies use ‘rule of thumb’ techniques for inventory management that do not stand up to scrutiny. These techniques are not scientific, or factual, and are often based on perception or intangible experience. In many companies this leads to overinflated inventory holding, ‘squirrel’ stocks and conflicting ideas between sales, finance, operations and supply chain as to how much inventory is truly required.
A fact-based inventory policy can be developed in any business
There are proven methodologies and formulae that can optimise the level of inventory against all of the service, working capital and equipment utilisation criteria. These policies can be developed and introduced with consensus from all functions; they can demonstrate clear rationale and logic behind the resulting inventory levels, and they can balance and satisfy all of the needs of the business.
Click here for an example of implementing inventory tools to faciltate an inventory management policy
Ask the experts
Our inventory management consulting team is highly skilled in inventory policy development. We have considerable knowledge and experience in defining policies, formulae and calculations that can ensure inventory levels are fully optimised, justified and balanced with all the functional needs.
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