There are many advantages to holding product inventories – evening out manufacturing, limiting bottlenecks in the supply chain, being responsive to demand, avoiding customer defection to the competition, reducing surcharges stemming from raw material price fluctuations over the year or even counteracting the difficulties inherent to seasonal activities or products.
However, overstocking can be detrimental to company profitability. This is because stocks tie up capital, and their storage and maintenance involve overheads & variables, and more to the point any overstocks may well end up being wasted through expiry dates or fashion trends that may make the goods obsolete.
Having taken all this on board, inventory optimization is particularly relevant. Thus it is essential that companies look into this issue to strike the right balance between the minimum inventory level and the expected service level, and little does it matter whether the stocks are finished products, goods in process or raw materials.
Accordingly, Eurodecision put its business analytics expertise and know-how to use to help its customers optimize the inventory management throughout the supply chain. Our experts will give you special guidance on the following issues:
- auditing existing inventories: appraisal of current service rates, ABC classification of catalog products, etc.
- positioning inventories geographically
- sizing warehouses
- optimizing the procurement method for each product family
- setting the best procurement frequencies and order quantities for each product
- sizing the safety stock for ideal customer service quality