Can You Accomplish Both?

By Ned Bauhof, Vice President, Precision Distribution Consulting, Inc.

Considering the historical difficulties associated with inventory planning, many companies believe that inventory optimization can only occur at the expense of customer service. This mindset is understandable considering the ongoing stock-keeping unit (SKU) proliferation, limited forecast accuracy, and massive seasonality trends that most organizations experience.

That said, the pursuit of more advanced planning tools should not stop. For those who wish to optimize their supply chain, it is important to note that the majority of a supply chain’s lifecycle costs are locked in at the start. No kidding. According to AMR Research, 80% of a company’s supply chain costs, including inventory planning and deployment, are captive in the strategic planning phase of supply chain optimization.  This does not mean, however, that inventory optimization stops at the strategic level.  True inventory optimization must be accomplished at the tactical level as well.

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