Jeff Primeau discusses potential side effects to consider when planning to optimize inventory.
Demand planning and forecasting projects are popular tactics today for boosting financial results and shareholder value-for good reason. They typically produce one-time and often significant inventory reductions but also higher inventory turns that allow organizations to sustain lower inventory levels over time. The results look great on paper, prompting executives to search for more ways to "optimize" inventory throughout the supply chain.Too often, though, the decisions to cut inventory and methods for doing so happen with little input from those responsible for distribution operations. Sometimes, distribution centers aren’t even aware of the changes until they notice issues emerging in their once-stable environments. Even when distribution leaders do take part in the discussion, they often fail to consider the potential side effects—primarily because few understand them.
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