We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » All (inventory) things considered
Perspective

All (inventory) things considered

December 19, 2012
James A. Cooke
No Comments

Unsold inventory acts as a drag on the supply chain—and on profitability—by tying up working capital. That's why supply chain executives might want to consider deploying advanced, "multiechelon" inventory optimization software that can minimize the total amount of stock across all nodes in the supply chain.

Earlier versions of inventory optimization software simply looked at stock held at specific locations. When multiechelon solutions calculate the amount of safety stock, they consider all inventory throughout a supply chain to be interrelated.

Today's multiechelon applications use parameters set by the software user (such as service levels and cost) to calculate how much inventory should be held at multiple points in the supply chain—for example, at the factory, at the central distribution center, and in regional distribution facilities. Some multiechelon solutions only deal with finished goods, while others also include raw materials and work in process (WIP) in their calculations.

Because multiechelon software views all inventory in the supply chain as a common pool for filling orders, it typically results in a company keeping less stock overall to serve its customers. In addition, these applications can also boost order fill rates because they ensure that the right items are on hand in the correct locations.

Multiechelon inventory optimization solutions could become even more powerful and precise in the future. That's because many analysts expect the software's inventory calculations to become more "demand-driven." A number of vendors are already working toward solutions that will use demand (based on point-of-sale data) as an input for inventory calculations and location deployment. When that happens, companies could keep even less stock on hand, further reducing working capital while still being responsive to customer demands.

    • Related Articles

      U.S. logistics costs: Are we measuring the right things?

      The next big things: "control towers" and demand shaping

      Running inventory like a Deere

    James A. Cooke is a supply chain software analyst. He was previously the editor of CSCMP's Supply Chain Quarterly and a staff writer for DC Velocity.

    Recent Articles by James A. Cooke

    Getting smart about using software intelligence

    The payback challenge

    A farewell, with thanks

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Wabash opens trailer manufacturing facility in Indiana

    • Six defining challenges of omnichannel fulfillment

    • Postal advocacy group says “excessive” July 9 stamp price hike will hurt consumers

    • California bill would require large corporations to disclose their greenhouse gas emissions

    • Panorays extends risk management throughout the digital supply chain

    Featured Video

    8757b894 244c 4429 b5d8 e6df7b479d82

    Penalties for Wood Packaging Material Violations

    Viewer Contributed
    Our Services Include: Customs Broker Denver Freight Forwarder Denver Global Logistics Denver Cargo Insurance Denver Customs Bond Denver Customs Clearance Denver Customs Duty Denver Isf Filing Denver More details: Phone : 281-445-9779 Email: info@gallaghertransport.com Website: gallaghertransport.com

    FEATURED WHITE PAPERS

    • Five questions to ask before electrifying your indoor forklift fleet

    • Operator assist system myths busted

    • Three layers of forklift safety: Promoting operating best practices

    • The Complete Guide to Automated Packaging

    View More

    Subscribe to Supply Chain Quarterly

    Get Your Subscription
    • SUBSCRIBE
    • E-NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing