Effective stock management is a top priority for companies looking to free up cash and leverage working capital. Common problems include balancing inventory across networks, optimizing inventory management processes, improving inventory turns, and driving on-time deliveries while reducing the overall investment in inventory. Many inventory managers find it difficult to determine the appropriate level of stock and the proper stocking methodology. More problems arise in changing market environments when the methodology and process must be periodically adjusted to match supply with customer demand.
With increasing variability in customer demand, companies must display agility and visibility in their inventory management capabilities. Furthermore, diversified product mixes and channels can make inventory tracking even more complicated and time consuming. Unfortunately, inaccurate inventory control can result in misplaced inventory, wrong shipments, or production bottlenecks due to parts shortages.
Companies that are successful in implementing inventory management transformation plans are better equipped to minimize inventory without affecting customer service. Enterprise Resource Planning Systems (ERP) are useful for planning and executing transactions, but these systems may not be optimal for the in-depth reporting and analysis activities needed to identify opportunities to improve inventory turns, increase sales, support the customer experience, and reduce overall inventory levels.