When talking about inventory optimization, most readers are interested first by the inventory reduction criterion. Despite the fact that overstock is a very common problem, to think about inventory reduction alone is not a very good idea, because pushing too hard on inventory reduction can strike at your service level. It should be emphasized here that stock-outs are more harmful for the bottom line than overstock, because of lost sales, poor client satisfaction level, and the overall image of the company as being an unreliable supplier. In this article you will find suggestions on some of the most efficient measures for inventory reduction, while at the same time reminding you where you should be careful to put effort in order to maintain a high service level.
As inventory management software system developers, we quite often receive one and the same question from our potential clients: “How much will our company’s bottom line profit increase after implementing your software system?” The first answer that strikes my mind is: “As much as your health would improve by taking antibiotic pills.” Let’s find out why in more details in this article.
What if we consider the following question the most important for Revenue maximization?
“How can I be as successful as possible selling my product to my (potential) customers?”
I am convinced that the biggest gain is tucked away in the prevention of no-selling! A common argument maintains that it is impossible to guarantee 100% availability for all products, because infinite stock would be needed! But is that so?
Monitoring SKU quantities and effective replenishment estimations are essential to keep the right amount of stock on hand. Right? One of the most powerful tools for that to do is thought to be forecasting. But is it really? Have you ever thought how the predictions are made?
Read the critical thoughts about forecasting as a tool to prevent stock outs and improve inventory levels in this article by the Supply Chain Experts.