Optimizing inventory levels across Procurement and Supply Chain

Written by Thomas Njor | Oct 27, 2024 3:05:07 PM

Begin by comparing historical consumption patterns against current stock levels and the forecasted inflow of goods. The goal is to recalibrate stock levels to the lowest feasible threshold. In an age where businesses need to be agile and capital efficient, maintaining excess inventory for items that aren’t mission-critical can tie up resources and decrease financial flexibility.

While it might be tempting to reach the absolute minimum instantly, it’s wiser to adopt a progressive approach. Adjust these levels either SKU-wise or by category, but crucially, take prompt action. Transition from assessment to system updating on the very same day, ensuring swift implementation. This immediacy not only helps in quick cost optimization but also sends a clear message about the organization’s commitment to operational efficiency.

Following this immediate action, consider delving into vendor-managed inventory for a more strategic approach. This method involves collaborating with suppliers to oversee your inventory on a consignment basis. The major advantage is twofold: maintaining optimal stock levels and only incurring costs upon consumption. Additionally, this fosters a deeper relationship with suppliers, turning them into active partners in your business operations. Although establishing such a system requires a mid to long-term commitment, the dividends it pays in terms of cost optimization, inventory efficiency, and enhanced supplier relations make it a pursuit well worth the effort.

See our top 20 free advice for rapidly reducing supplier costs

View full post