Supply Chain Graphic of the Week - Inventory Optimization Hierarchy
Inventory Optimization Projects and Technology Involve Optimization at Three Levels: Policies, Inventory Deployment, and Customer Service; Different Questions, Different Answers
SCDigest Editorial Staff
Inventory Optimization programs and technology solutions have been hot in recent years, as companies look for answers to the challenges of managing inventories across increasingly long supply chains and with multiple "echelons."
The graphic below was provided by Jeff Metersky of Chainalytics during our recent Supply Chain Videocast on Keys to Success in Inventory Optimization. Using the slide, Metersky said companies usually move through a progression in their Inventory Optimization programs, beginning first with optimization of inventory and safety stock policies, next moving to optimization of deployment and replenishment strategies across the supply chain, and finally segmenting customers and using "service policy" optimization to further improve results.
Inventory Optimization Hierarchy
What's especially valuable about this chart is that it outlines the answers provided, typical business objectives, and the supply chain benefits of each stage in the hierarchy.