The issue with inventory optimization is that it is multifactorial.
That means it relies on a whole range of different factors in order to be truly effective.
If you focus solely on one single criterion, one of those factors, then you are likely to be missing out on big opportunities to better optimize your inventory.
In this video Phillip Slater explains why.
Inventory Optimization is Multi-Factorial
Video Transcript
Hi, my name is Phillip Slater and for the next couple of minutes I‘d just like to give you something to think about.
When it comes to Inventory optimization having a singular approach on just one technique will leave you short changed.
You need to think about things like the processes that you’re using for managing your spare parts.
I mean it could be it that you could significantly reduce your own spare parts holdings by reducing your own internal lead time for decision making.
Now I saw an organization once that took three months to go from stock out to processing an order.
Three months.
That of course added to their inventory because that three months becomes part of their total restocking lead time.
What about organizations that don’t pursue issues like consignment stock, for things where suppliers would happily do an appropriate deal for consignment stocking.
Another approach that companies take when they’re looking at so-called optimizing their Inventory is that they may want to just look at obsolete stock. They may just want to look at dead stock. They may just want to look at excess stock.
All great ideas individually but if you truly want to optimize you’ve got to focus on much more than that.
The issue here is that inventory optimization is multifactorial. That means it relies on a whole range of different factors in order to be truly effective.
If you focus solely on one single criterion, one of those factors, then you are likely to be missing out on big opportunities to better optimize your inventory.
That’s something the think about.
My name is Phillip Slater.
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Posted by: Phillip Slater