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Supply Chain Newsmakers Video Series:

Do You Really Need Optimization for Multi-Echelon Inventory Planning?


 

Oct. 31, 2016

Over the last five years or so, a category of supply chain software called Multi-Echelon Inventory Optimization (MEIO) has gained significant popularity. The promise is that inventories in multi-tiered networks can be "rightsized" (and generally reduced) by looking at safety stock levels across the full supply chain, not just at one site or tier at a time, as in the approacch of traditional supply chain planning tools.

But here is something interesting: Dr. Michael Watson, of OpEx Analytics and Northwestern University recently wrote a column in SCDigest arguing that in most cases true optimization is really not required or very difficult to achieve.

That's not to say there isn't value in inventory planning for multi-tiered supply chains, Watson says, but companies should understand what role if any true optimization should play.

Please watch SCDigest editor Dan Gilmore and Watson discuss this provocative point of view, as excerpted from our weekly Supply Chain Video News broadcast with CSCMP this week.

You can find Watson's full column here: You Don't Need the Optimization in Multi-Echelon Inventory Optimization


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