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- July 21, 2011 -

 
     
 

Supply Chain Graphic of the Week: The Potential for Network Inventory Reduction

 

29% of Companies See Opportunity to Reduce Network Inventories by More 15%, According to New CSCO Insights Study

 
     
 

By SCDigest Editorial Staff

 
 

 

It's no secret that a combination of factors are making today's supply chain networks more complex, ranging from globalization to multi-channel commerce and more.

That, naturally enough, puts added pressure on inventory management, especially as many companies lack the tools to extremely well manage inventory holistically across multiple echelons of their supply chains.

Network inventory management was the topic of a recent survey and report from CSCO (Chief Supply Chain Officer) Insights, the research arm of SCDigest. From that report is the graphic below, which asked respondents by how much they believed it was possible to reduce their current network inventory levels through a combination of process and technology improvements.

 

 

As can be seen, almost 29% believe reductions in total inventory of more than 15% would be possible. Another 24.6% see opportunities to reduce inventories by 11-15%. Just 2.3% see little or no opportunity to reduce network inventories - and we many of those are missing something.

The full report contains a number of charts on issues and strategies relative to network inventory management, and offers five strategies companies can consider to improve their network inventory performance. It is available here: Supply Chain Executive Brief: Five Strategies for Reducing Supply Chain Network Inventories.

 
 
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Feedback
2008-10-03

Oct. 3, 2008

There are valid reasons for both the DC and DSD distribution models, but neither should determine the store assortment, which depends on the consumer.

The Distribution Center model makes sense when you have many prepackaged products which are continuously replenished and require little in-store servicing. With the facility justified, you can also add seasonal and holiday 'in and out' products which can share the distribution network.

The key is to manage the time supply of inventory in the warehouse and distribute it efficiently.

The Direct Store Delivery model can be implemented purely as a distribution method or also allow the manufacturer to manage some of the in-store merchandizing.

I do not see any advantage of using DSD simply to deliver merchandise. Although it may help the 'mom and pops' that are on the same route as a large retailer, the DSD model must be more expensive. Once the big drops are removed, it will become more costly to reach the independent retailers but the larger retailer must benefit.

If DSD is used to support in-store merchandising, then you have a different story. The manufacturer's representative can give their products the individual attention that increases their sales. The bad thing is that they can also load up the store with inventory if no one is watching.

Bill Bittner
President
BWH Consulting



 


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