World Class Inventory Management - Beyond Cost Reduction to Strategic Advantage

By Bridget McCrea, Contributing Editor -- Supply Chain Management Review, 9/13/2006

A high-tech manufacturer's ability to accurately forecast future needs and efficiently manage current inventory is a key competitive weapon in keeping up with rapid advances in technology. It also gives manufacturers an edge in dealing with constant demands for new products and shrinking product lifecycle time.

To effectively maximize service levels despite the uncertainties of the high-tech market, manufacturers and brand owners must be able to fulfill short orders in a snap, plan adequately for longer manufacturing cycle time and always fulfill orders from customers within the order cycle time. The best performers treat effective supply chain and inventory management as an enterprise-wide strategic discipline, and not a one-time mathematical exercise. Initiatives at these companies have resulted in:

•Significant revenue growth achieved through improved understanding of customer buying patterns and increased product availability.

•The ability to strike the right balance between cost-effective inventory levels and excellent customer service.

•Utilization of inventory and inventory investments as strategic weapons to increase market share.

Inventory management can help companies monitor, manage and leverage strategies for what to make, what to buy and from whom. It can also help understand what inventories are needed in the different stages of the supply chain to ensure best-in-class customer service levels . It takes companies beyond algorithms and helps them learn and continuously improve their inventory management policies and processes.

With a high-tech industry slowdown forecasted by various industry analysts, no company can afford to get caught with a pileup of inventory. At the same time, companies do not want to lose market share if availability is compromised. Using inventory management solutions, manufacturers can integrate staging, postponement and other effective strategies into the supply chain, thus maximizing service levels and optimizing current inventory while planning for the future in a calculated, profitable manner.