Centralising inventory distribution can be one of the better strategies to reduce inventory investment for your organisation.
Listed below are successful strategies that we have implemented for some of our clients as part of their inventory reduction programs. A Turn Key Solution presents these inventory reduction strategies as a guideline, some can be implemented very quickly while others need the proper level of assessment and analysis to ensure that the level of reduction is realistic without compromising existing service levels.
- Managing inventory postponement where the final product is made up of components or sub-assemblies.
- Using forecast demand or sales history to constantly review slow moving inventory.
- Reduce demand variations will allow planners to manually release work orders periodically.
- Constantly monitor inventory performance and delist the "Dog" types to free up warehouse space.
- Moitoring the lead time variances of all products to manageable levels without draining the supply channel.
- Establish upper and lower leadtime threshold limits for air, sea and cross dock consignments.
- Continuously re-evaluate ERP planning settings: safety stock, ROP, safety time etc.
- Cleanse planning settings to ensure that only a single trigger point works for planning process.
- Inventory rationalisation using multiple datasets such as GM, sales volume and EBIT.
Supply chain footprint
- Cross docking shipments direct to your customers avoids inventory holding costs and reduces most warehouse processing costs.
- Assess the use of storage modules within your warehouse to determine if space is being fully utilised.
- Changing the type of MHE used can improve throughput and optimise space utilisation
- Ensure that all costs are taken into account prior to changing rack positions or leasing new MHE.
- Close satellite warehouses and centralise distribution where possible to better manage inventory investment & Distribution cost.
- Run a warehouse sale to deplete slower moving stock and recover some inventory investment.