Login



For PLUS+ subscription assistance, contact customer service.

Not a PLUS+ Subscriber?

Become a PLUS+ Subscriber today and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access
  • 7 Magazine Issues per Year
  • Companion Digital Editions
  • Digital Edition Archives
  • Bonus Email Newsletters

Subscribe Today!

Premium access to exclusive online content, companion digital editions, magazine issues and email newsletters.

Subscribe Now.


Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access. All feature articles, bonus reports and industry research through scmr.com.

  • 7 Magazine Issues per year of Supply Chain Management Review magazine.

  • Companion Digital Editions. Searchable replicas of each magazine issue. Read them in any web browser. Delivered by email faster than printed issues.

  • Digital Editions Archives. Every article, every chart and every table as it appeared in the magazine for all archive issues back to 2009.

  • Bonus email newsletters. Add convenient weekly and monthly email newsletters to your subscription to keep your finger on the pulse of the industry.

PLUS+ subscriptions start as low as $109/year*. Begin yours now.
That's less than $0.36 per day for access to information that you can use year-round to better manage your entire global supply chain.

For assistance with your PLUS+ subscription, contact customer service.

* Prices higher for subscriptions outside the USA.

PLUS+ Customer Service Support


Customer service for all PLUS+ subscribers is available Mon-Fri, 9am-5pm Eastern time.

Email: [email protected]
Phone: 1-800-598-6067 (1-508-663-1500 x294 outside USA)
Mail: PO Box 1496, Framingham MA 01701-1496, USA



You have been logged out of PLUS+


For PLUS+ subscription assistance, contact customer service.

Need to access our premium PLUS+ Content?
Upgrade your subscription now.


Our records show that you are currently receiving a free subscription to Supply Chain Management Review magazine, or your subscription has expired. To access our premium content, you need to upgrade your subscription to our PLUS+ status.

To upgrade your subscription account, please contact customer service at:

Email: [email protected] Phone: 1-800-598-6067 (1-508-663-1500 x294 outside USA)

Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including:

  • Full Web Access. All feature articles, bonus reports and industry research through scmr.com.

  • 7 Magazine Issues per year of Supply Chain Management Review magazine.

  • Companion Digital Editions. Searchable replicas of each magazine issue. Read them in any web browser. Delivered by email faster than printed issues.

  • Digital Editions Archives. Every article, every chart and every table as it appeared in the magazine for all archive issues back to 2010.

  • Bonus email newsletters. Add convenient weekly and monthly email newsletters to your subscription to keep your finger on the pulse of the industry.

PLUS+ subscriptions start as low as $129/year*. Start yours now.
That's less than $0.36 per day for access to information that you can use year-round to better manage your entire global supply chain.

This content is available for PLUS+ subscribers.


Already a PLUS+ subscriber?


To begin or upgrade your subscription, Become a PLUS+ subscriber now.

For assistance with your PLUS+ subscription, contact customer service.

Sorry, but your login to PLUS+ has failed.


Please recheck your login information and resubmit below.



For PLUS+ subscription assistance, contact customer service.

Better Inventory Planning with Basic Data Analysis

While the prediction of inventory needs will never be absolutely perfect due to variation in customer orders and external factors, a look at your inventory data can help free up cash.

By ·
By ·

Editor’s Note: Tracey Smith is an internationally recognized business author, speaker and analytics consultant. She is the author of multiple books and hundreds of articles. Tracey has worked with and advised organizations, both well-known and little-known, on how to use data analytics to impact the bottom line. Her career spans the areas of engineering, supply chain and human resources. If you would like to learn more, please visit www.numericalinsights.com  or contact Tracey Smith through LinkedIn. You can check out her books on her Amazon Author Page.


Inventory optimization is the provision of the right inventory in the right quantities to meet the supply and demand of the organization. Even today, getting the right amount of inventory in stock at the right time can be a challenge. While we would love for our customers to order equal amounts of product each month, that’s just doesn’t match reality.

There are significant benefits to inventory optimization. Inventory is essentially cash that tied up and sitting on your shelf. It can’t be used for other business initiatives. Reducing the amount of inventory for each product will free up cash. However, too little inventory will increase the risk that you will be out-of-stock for a customer order.

A reduction in inventory can also reduce associated carrying costs and reduce the risk that you are left with extra inventory when a product becomes obsolete.

If you’re a large company, the number of data records required to analyze your inventory needs might be so large that you’ll need an enterprise solution to analyze the patterns. However, if you’re a smaller company, or if you wish to analyze your inventory at the division or business until level, the number of parts you carry will be small enough that patterns can be analyzed with tools like Excel, Tableau or Minitab.

So, what exactly is it that we would like to analyze in order to make decisions about our inventory? If you’re a retailer or distributor, then the products on your shelves are likely sold as complete entities. In this case, we can examine the customer ordering patterns for each product over the past few years to determine which products are trending upward, which ones are high volume, which ones are seasonal, which ones may be approaching obsolescence and which ones are highly volatile in order quantities each month. A review of this information will provide guidance on future inventory decisions, especially when combined with an analysis of product profitability, i.e., how much each product contributes to the bottom line.

If you are a manufacturer, the inventory on your shelves is a series of parts that are used to make final products. In this case, we would like to analyze the parts usage over time and look for the same patterns as before. Low use of a specific part may indicate a newly launched product or a product heading into obsolescence. A large list of part numbers in the same category (example: gears or fittings) may indicate an opportunity for product redesign to reduce the number of unique part numbers.

The value of each part also comes into play. If a part is inexpensive, then we can afford to carry more inventory without a substantial increase to the amount of money tied up in inventory. However, if a part is expensive, we need to carefully choose the number that we keep in stock.

Volume is another factor in inventory selection. If a product and its associated parts are ordered in high volume each month, carrying too little inventory would create too much risk in disappointing a large number of customers. This is especially important if the high-volume part is also a high-profit part. The loss of revenue due to cancelled orders would be significant.

The factors discussed in this article can help you classify inventory into groups such as A, B or C parts with A representing the highest priority inventory. Classifying inventory is not a simple task since multiple factors need to be considered like ordering patterns over time, part profitability, and lead times for replenishment. If completed, it does help in providing visibility into the most crucial parts.

Regardless of the approach you use, analyzing the historical data or your customer ordering and / or parts usage can provide guidance in setting inventory levels for each item. While the prediction of inventory needs will never be absolutely perfect due to variation in customer orders and external factors, a look at your inventory data can help free up cash. In addition, if opportunities exist for part consolidation, a company can also obtain the benefits associated with reduced complexity and the time it takes to manage extra parts and suppliers.


Subscribe to Supply Chain Management Review Magazine!

Subscribe today. Don't Miss Out!
Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!

Latest Whitepaper
The Digital Supply Network: The Era of Supply Chain Visibility and Tracking
Supply chain innovation will determine which companies succeed as traditional practices are disrupted.
Download Today!
From the November 2018
The combined forces of a strong economy, e-commerce growth and a tight labor market are making it more important for distribution center (DC) operations to find ways to make their existing infrastructure and people more productive. Software and automation continue to prove to be a vital part of the solution.
Shining a light on the “black box” of transportation
Does Artificial Intelligence (AI) -enabled demand forecasting improve supply chain efficiency?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!


Latest Webcast
Leveraging the Internet of Things (IoT) in Manufacturing
Is Digital Transformation a risk or an opportunity? This webinar will detail Manufacturing industry challenges and how using IoT can address these challenges through optimizing logistics, improving processes and gaining meaningful insights.
Register Today!
EDITORS' PICKS
Global Kuehne + Nagel Indicators Signal Global Supply Chain Resilience
So far this year, international merchandise trade has risen by 10.6%. Emerging markets and North...
A.T. Kearney’s Global Business Policy Council Predictions Released
GBPC’s 10 major predictions, fleshed out in the study, are based on continuous scanning of the...

New Research Indicates Greener Supply Chains Mean More Profit
Transparency is key when selecting new suppliers as 85% of businesses want to achieve a...
New Survey Measures Potential Impact of Tariffs on U.S. Supply Chains
The proportion of total output produced abroad is meanwhile expected to rise very marginally.