Rebecca Bradley, Director of Marketing discusses supply and demand's unpredictability.
Inventory or stock management is difficult for most distributors, not least because of the unpredictability of supply and demand. Flaky supplier performance, supply chain disruption, materials scarcity or perishability all lead organisations to overstock and create a premium-sized buffer. But that is at odds with what the business really wants given that stock equates to cash that is tied up sitting on shelves. So how does the average distribution firm walk that fine line between great customer service and holding the least amount of stock as possible?
Multi-functional stock management is the answer and most companies are doing one or more elements of it. Let’s take a look at the three core functions in more detail.
Physicality; basically the physical moving of stock. Goods in, goods out and everything in between. Typically it is paperwork-heavy and can still mean rekeying of data into the back end finance system in the office for some organisations. The problem here is accuracy.
Next is Planning; using a methodology to better manage supply and demand. Many organisations that we talk to utilise a methodology (such as Kanban to support a Just In Time strategy or MRP) to try to contain the unpredictability of their supply chain or the natural ebb and flow of customer orders, but not always successfully. Whatever the methodology you are always going to be reliant on data – inaccuracies in core data make a mockery of planning.
And then finally there is Optimisation. This really relates to stock outs and overstocking of some lines (probably because of poor data and planning) and is a very common problem for distributors. This is where stock optimisation can make a difference.
Stock optimisation solutions such as Netstock can effectively, and mathematically, calculate when and where stock should be deployed to maximise service levels whilst keeping an eye on overstocking. Its clever technology is used to analyse trends and augment your supply chain planning based upon previous performance and likely customer buying patterns, all pulled from live data within your ERP system.
I’ll be covering more about the Netstock solution here on the CPiO blog over the next few weeks, but why not take a look at the collaborative whitepaper from Netstock and Sage North America to find out more entitled Better inventory Management.
Rebecca Bradley is the Director of Marketing. Please feel free to contact Rebecca via email firstname.lastname@example.org