Empty shelves, backorders, products that are not delivered on time… It all leads to high additional recovery cost and unhappy customers. Having the right inventory strategy can prevent these problems without excessive inventory costs.
The location of warehouses and the inventory levels determine what service can be provided to customers and which percentage of orders can be delivered on time and in full. There is a clear trade-off between the cost of keeping inventory and the cost of lost sales and unsatisfied customers due to late deliveries.
Multi-echelon inventory optimization (MEIO) offers the possibility to calculate the optimal inventory levels per link in the supply chain, whether this is a factory, an owned warehouse, or a consignment stock location.
Safety stock makes sure that uncertainties in demand and lead-times are covered. Determining the the right safety stock level requires special attention. Depending on product specifics, it is sensible to keep central or decentral stock.
The detail of efficient inventory management is often neglected in designing a supply chain. However, reducing lead times and increasing delivery reliability can lead to substantial improvements in service and costs.
We aim to connect strategic network decisions to tactical inventory issues and thereby bridge the gap between two subjects that are usually covered separately.