OPTIMIZE STOCK LEVELS
Why is it crucial to optimize the stock levels?
Customers’ demand diversi cation and economics uncertainties have started to put a huge strain on supply chains. Finding the balance between serving customers and managing costs is more complex than ever. This is one of the reasons why the supply chain is an essential element for companies to be at the edge of competitiveness.
Holding stock has become a strategic lever to meet customer’s demand. For many companies experiencing fast and exponential growth, little attention is paid to stock levels because carrying high levels of stock seems like an e ective way to meet the demand. However, it inevitably becomes a nancial burden and a threat to establishing a long-term stability. These nancial gains being often overshadowed by an outstanding service level. Supply chain leaders are becoming more and more aware that optimizing stock levels is one of the top lever towards nancial performance.
OBSOLESCENT STOCK LEVEL
Optimising nance and customer satisfaction simultaneously
The problematic behind optimising stock levels can be rephrased in a simplistic way: having the right product at the right place, at the right amount. It does not necessarily mean to reduce stock levels as much as possible, but to nd the right level to address demand volatility and logistics constraints. Bene ts of reaching an optimised stock level are numerous.
The rst bene t that is often evoked when discussing stock levels is nancial. For many companies having ambitious targets, growth is not only achieved organically but also externally. To perform acquisitions, companies need cash ow while sitting inventory is a capital lockup. Thus, optimizing stock levels by reducing unnecessary stock will allow the working capital to decrease drastically.
Financial KPIs can also be improved by stock being at the right place, reducing the cost-to-serve. Stock balancing between locations across the network is often done in emergency but is also a very costly and too common procedure. In industries with limited shelf life products, stock destruction linked to waste is also an important cost centre that can be reduced by optimising stock.
On the other hand, stock levels cannot be reduced to the bare minimum. Optimizing stock levels allow companies to carry the right amount of the right product, and thus to be able to serve the demand. Service level cannot be sacri ced in this process, it is an essential KPI to follow in order to measure the bene ts of stock optimisation.
Finally, stock optimisation is designed not only for nished goods but also for intermediate goods: semi- nished and raw materials. Optimising these stock levels will enhance the use of production capabilities (resources and storage utilization for instance) while allowing to quickly react to demand surges.
Download this full Best Practices whitepaper and discover the 5 key pillars of an optimized stock journey.
In this white paper written by FuturMaster’s experts, you will learn:
o Who’s Concerned by optimising stock levels?
o Why is it crucial to optimize the stock levels? What are the Bene ts?
o Key Performance Indicators (KPIs) impacted by stock level optimisation
o What are the Challenges companies are facing when Optimising stock levels?
o How to optimise stock levels? The journey towards optimised stock The 5 Key Pillars o How FuturMaster can help you to optimise your stock levels?
o S&OP Processes Optimisation Case Studies