In an ideal world organizations would not need warehouses and/or distribution centers (DC). Material would never stop moving. There would be zero lead-time, and organizations could provide the material immediately when needed. In reality lead-time is not zero and every organization struggles to maximize customer service while minimizing inventory and related costs.
Organizations attempt to deal with the problem in a multitude of ways:
- Some organizations store excessive amounts of inventory so they will never run out. This increases their cost basis and potential for obsolescence.
- Some organizations do not stock enough inventory and stock out. This increases the likelihood that the customer will go elsewhere and be lost forever, and/or increases cost due to expediting.
Neither method is practical. Many organizations do not tackle inventory management because they feel it is too complex or expensive. In many cases significant impacts can be made by changing the inventory and procurement processes. ASI can:
- Analyze the current situation and create improvement strategies
- Create stocking/non-stocking policies Improve existing inventory forecasting techniques
- Reduce cycle stock and safety stock inventories
- Establish optimal safety stock levels tailored to individual products
- Construct metrics for continuous evaluation and improvement