Supply Chain Inventory Challenges

CaptureRunning a supply chain operation comes with a great deal of the unexpected.  For years companies have tried to optimize and streamline their supply chains, only to have the littlest frustrations pop up in the most untimely manner.  And when I say the littlest thing, I mean something as small as a duplicated spreadsheet, or the slightest bit of miscommunication can cause the ultimate headache. This is why having a strategy and some compliance are key to running an efficient shop.  One of the biggest parts to that strategy is keeping a good handle on your inventory.  How much do you have, is it still relevant (obsolescence), and how much are you paying in carrying cost.  Inventory can cause several headaches in itself:  
  • Inventory is usually the largest asset, as well as the largest expense item for manufacturers
  • Executives are continually charging their staffs with reducing inventory levels to preserve working capital and avoid inventory carrying costs
  • Most experts agree annual inventory carrying cost range between 10% to 35% and include: capital costs, warehousing, labor, insurance and taxes
Even with the most sophisticated inventory management strategies, manufacturers are forced to increase inventory levels due to the inefficiencies that are inherent in all supply chains.  This is one of many reasons why suppliers and contractors are turning to a third party solution to aid them in the strategy of warehousing or reducing inventory.  There are several advantages that companies benefit from when utilizing something like an inventory ownership program or solution:
  • Preserves working capital
  • Saves inventory carrying costs
  • Allows cash flow budgeting over multiple years
  • Eliminates lead time
  • Guarantees the cost of the components over multiple years
  • Secures the inventory for production and service over multiple years
  • Protects quality by avoiding open-market buys- counterfeit prevention
Inventory is just one of many issues that can confront a supply chain management team, but you can definitely see how beneficial just accounting for that one piece is.  Ultimately, every supply chain management team should have a strategy in place for dealing with everyday problems that can come up. Even if it seems very simple, there should always be a back up plan or some type of temporary work around involved.  Take care of the bottom line and always keep in mind that things are going to come up…it’s just how well prepared you are to handle them that will set you apart from the others that are struggling.        Question – What is your biggest challenge or obstacle in the supply chain environment?  
January 10, 2017 In: All Posts Comments (None)

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