A multi-echelon inventory management system occurs when multiple storerooms are part of a spare parts inventory management and supply system.
For example, where a company on a large site has a central storeroom and then one or more satellite storerooms that are located closer to the operational activity.
Another example: When a company has a central storeroom that acts as a supplier to storerooms at multiple locations.
A Multi-echelon Inventory Management System Complicates things
This approach to inventory management complicates stock level decision-making. This is because the items held at all locations must be taken into account.
Multi-echelon systems provide a number of opportunities for reducing inventory holdings. However, they also present issues that need to be managed.
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Author: Phillip Slater