The journey to excellent Multi-Echelon Inventory Planning
For companies that exist in today’s complex omni channel and multisite environment, achieving stock availability has never been more difficult ... and costly! In an ideal world we would have total visibility, however in reality, supply chain information is often limited. To help companies in their journey to excellent multi-echelon inventory planning, we explore three planning scenarios.
Businesses today exist in far more complicated environments than ever before. Given that a typical supply chain is now comprised of an increasing number of levels and channels, it is vital that inventory is managed effectively across the entire network. However, with so many different links in the network (DC, regional DCs, branches etc), ensuring that stock is available in the right time at the right place has never been more difficult.
Excess stock is one of the biggest challenges that businesses face when planning across multiple locations. The problem can be exacerbated by the bullwhip effect; a notorious phenomenon, where safety stock is built up at each location and where a relatively small change in demand leads to a disproportionate increase in stock at the beginning of the chain. Furthermore, ensuring that the right stock is available at the right locations is another major issue that must be managed carefully. Failure to do so could result in; revenue loss, disappointed customers and unnecessary inventory costs.
It is important that your business adopts the most suitable planning approach. However, which approach is best for your business?