Inventory Optimization in a multi-echelon network
Tuesday, November 10, 2009 at 11:12PM
Companies are constantly walking the fine line between carrying too much on-hand inventory to ensure on-time delivery requirements or cut costs by maintaining lower inventory levels that lower their service levels. Given today's global supply chains, longer lead times and unpredictable demand from one month to the next, inventory is integrally connected to a firm's profit margin.
Companies with thousands of products that are located in hundreds of locations face enormous challenges in determining the right level of inventory. The challenge is even greater when the locations are situated in different tiers or echelons of the enterprise’s distribution network which is a common distribution model for retailers, distributors and manufacturers.
A multi-echelon distribution network presents many opportunities for inventory optimization that the enterprise must pursue to offset potential increases in transportation, warehouse and occupancy costs. The key to achieving those savings is to use a software inventory optimization tool that for managing your multi-echelon inventory. With the right set of tools and approach, it is possible to achieve both better customer service with less inventory and is a win–win strategy for your inventory management.