Inventory Management Needs An Overhaul

Inventory Management Needs An Overhaul

November 11, 2018

It’s a classic conflict: Operations wants to drive inventory down. Sales and Marketing want excess inventory to satisfy unexpected customer demand and avoid stock-outs.

Modern inventory management software alone cannot reduce excess inventory because of the continued fear of stock-outs. It’s time for some changes in inventory management.

This post is based on the Logistics Management article, Inventory Management 101: Time to step up to the plate, by Bridget McCrea, October 4, 2018 Image source: Noel Hendrickson/Getty Images.

Discussion Question:

1. If safety stock recommendations generated by inventory management technology solutions are ignored, what policy could be implemented to reduce safety stock or dated inventory items at a company like L.L. Bean?

Guidance: Students should review inventory management concepts.  Students should find a retailer and perform a quick internet search on that company.  Ask the students to develop a process to identify categories of retail inventory based on importance to customer satisfaction.  This might include a discussion of ABC inventory analysis.

What should be the policy to reduce safety stock for broad categories based on ABC analysis?  How should Sales and Marketing teammates be involved in setting safety stock policy?  Continue reading

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Procurement May Need to Buy a Clue

Procurement May Need to Buy a Clue

November 5, 2018

The procurement function should reduce its focus on cost cutting and place more emphasis on supplier collaboration.

Supplier collaboration can lead to shorter new product development, potentially discover value added opportunities for all parties, and potentially lead to new product development itself.

The key is shared data and analytics in a collaborative environment.

This post is based on the Supply Chain Digital article, From periphery to driving force – procurement tech is enabling innovation, by Alex Saric, October 6, 2018 Image source: Shutterstock / Syda Productions.

Discussion Question:

1. What happens to new product development within a company if key suppliers’ only concern is cost reduction?

Guidance: Students should review new product development and sourcing.  What happens to quality if there is excessive cost pressure on suppliers?  Is there incentive for suppliers to provide knowledge and help if costs are the only concern by the buyer?  The students should see that a cost reduction focus on sourcing can lead to many poor outcomes if not coupled with long term partnership arrangements.

2. Will sharing data and analytical outcomes with key suppliers be dangerous to the company? What incentives could be put in Continue reading

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Plan Ahead For Brexit

Plan Ahead For Brexit

October 29, 2018

Brexit poses multiple challenges to supply chain management.  These challenges include changes to customs and tariffs, legal implications regarding contracts and intellectual property, lead times, and contractual incentives.

Firms that plan ahead with a variety of scenarios in mind stand the best chance of gaining first mover advantages as the new supply chains are put into place in the next six months.

This post is based on the Supply Chain Digital article, How can businesses prepare their supply chains for Brexit?, by Marcus Lawrence, October 11, 2018. Image source: Shutterstock / worradirek.

Discussion Questions:

1. How can firms subjected to Brexit in the United Kingdom maintain short lead times for imported inventory?

Guidance: Students should search the internet for articles about Brexit and the potential issues with imports/exports.  Students could then brainstorm in a class discussion about ways to maintain short lead times.  The discussion may include the idea of maintaining larger inventories in the UK or EU to overcome the delays caused by Brexit.

1. Will an efficient or a responsive supply chain potentially be impacted the worst in Brexit? Why?

Guidance: Review responsive and efficient supply chains.  Students should have a Continue reading

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