HOW TO OPTIMISE STOCK LEVELS?
Why is it crucial to optimise the stock levels?
Customers’ demand diversification and economic 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 challenge is one reason 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 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 effective way to meet the demand. However, it inevitably becomes a financial burden and a threat to establishing long-term stability. An outstanding service level often overshadows these financial gains.
Supply chain leaders are becoming more and more aware that optimising stock levels is one of the top levers towards financial performance.
KEY PERFORMANCE INDICATORS (KPI)
OBSOLESCENT STOCK LEVEL
What are the challenges companies are facing when optimising stock levels?
In a global economy where demand volatility has dramatically increased over the last few years, stock optimisation has become more complex than ever. Companies struggle to control their stock levels because product portfolios have primarily expanded. Products have become more and more diversified when storage capacities have remained limited. Availability of products in stores is critical when competition is fierce and customers are unwilling to wait. Trends are evolving at a faster pace than before, increasing the risk of stock obsolescence.
Industries such as the cosmetics sector are launching more new products than ever, putting tremendous stress on their supply chains because of demand variability.
Supply networks have also grown more complex: multiplication of facilities and suppliers, the evolution of production processes. Although the bullwhip effect* is not a new phenomenon, its impact has risen in the supply chain.
Companies also face another considerable challenge in their supply chain: the lack of synergy between demand and supply. When setting a stocking policy, it is critical to ensure an alignment of processes between different services within the supply chain.
* Disruptions in demand signals are amplified as they move along the supply chain.
Covid-19 impact on optimising stock levels
The Covid-19 pandemic has shown how fragile organisations were regarding disruptions to their supply chains.
Companies able to react quickly and which had optimal stock level monitoring could take on this challenge and meet customer demand.
Download this full Best Practices white paper and discover
the 5 Key Pillars of an optimised stock journey!
In this white paper, you will also learn:
- Who’s concerned by optimising stock levels?
- Why is it crucial to optimise the stock levels? What are the Benefits?
- How to optimise stock levels? The journey towards optimised stock – The 5 Key Pillars
- How FuturMaster can help you to optimise your stock levels?