How do you get the maximum customer service level from limited inventory? When you set inventory targets you have to
- profile order lead times - if some of your customers give you more time between when they order and when they expect delivery, leverage that and keep your inventory further upstream.
- segment your customers & products - have differentiated customer service level based on strategic importance, cost of servicing a customer and profitability of each customer & product.
- shorten your manufacturing & procurement cycle time - evaluate where you are spending time in getting material to inventory points and reduce where possible.
- lower supplier variability - analyze each case where the plan was missed, understand root cause and put in fixes to avoid them in the future.
- lower demand variability - analyze spikes in demand; most probably that is bull-whip effect (or here) and not end consumer behavior. If bull-whip, work with your customers through incentives, knowledge sharing.
You are a reliable vendor, not because you deliver to your customers when you promise, but because you deliver to your customers when they want it! What do you think?
Karthik Mani
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