Inventory is only needed to balance the required customer lead time and supply lead time capability.
Inventory is an essential part of most businesses to provide good service availability OTIF (on time in full) however too much stock ties up working capital, costs for storage space utilised and often obsolescence incurs write downs. Our experience is that most inventory has a mix of issues which need different solutions.
Our successful projects include modelling and improvement in the stocking of products in 64 locations around the world and the supporting supply chain, reducing the stock and costs by millions of pounds and increasing the availability, to just a single factory and warehouse where we dramatically reduced the length of time stock was in the warehouse avoiding the need to discount food with short sell by dates
Typically we review stock at an item level by location, looking at history over 2 to 3 years and then build all that information up to provide an aggregate picture. Our modelling techniques allow us to predict how changes in supply, demand or other stock parameters will affect stock levels and availability performance. This allows us to manage the inventory better with the existing supply chain and identify opportunities in the supply chain which could have substantial benefits based on accurate modelling.
If you can provide a data file we will come along and explain what your stock optimised could look like.