Managing optimal inventory in the supply chain is critical
for an enterprise. The ability to increase inventory turns
and the use of best inventory practices will reduce inventory
costs across the supply chain. Moving towards zero inventory
will result in effective inventory management in the business
process. Inventory Optimization Solutions can be implemented
easily using inventory optimization software. With Radio
Frequency Identification (RFID) technology, inventory can
be updated in real time without product movement, scanning
or human involvement. Companies have to adopt best practices
to optimize operational processes and lower their cost structure
through inventory strategies.
With supply chain planning and latest software, companies
are managing their inventory in the best possible manner,
keeping inventory holdings to the minimum without sacrificing
the customer service needs. The zero inventory concept has
been around since the 1980s. It tries to reduce inventory
to a minimum and enhances profit margins by reducing the
need for warehousing and expenses related to it. The concept
of a supply chain is to have items flowing from one stage
of supply to the next, both within the business and outside,
in a seamless fashion. Any stock in the system is caused
by either delay between the processes (demand, distribution,
transfer, recording and production) or by the variations
in the flow. Eliminating/reducing stock can be achieved
by: linking processes, making the same throughput rate on
processes, locating processes near each other and coordinating
flows. Recent advanced software has made zero inventory
strategy executable.
"Inventory optimization is an emerging practical approach
to balancing investment and service-level goals over a very
large assortment of Stock-Keeping Units (SKUs). In contrast
to traditional `one-at-a-time' marginal stock level setting,
inventory optimization simultaneously determines all SKU
stock levels to fulfill total service and investment constraints
or objectives".
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