Why inventory management should be a company-wide conversation

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Don’t get caught having your company’s inventory management conversation alone! Making the most of one of your company’s largest assets means bringing together everyone involved from the manufacturing floor to the corner office, and focusing on more than just what’s in your warehouse. Re-evaluating your inventory management practices can help you overcome rising supply chain costs, increasing customer demand and the growing complexity of global operations. It can also help raise profits and reduce risk. Successful inventory management all boils down to a delicate balancing act. You need to have enough of a product to satisfy customer demands, but not so much that it risks becoming obsolete or sinks your business with high carrying costs. As David Thomas, Director of Global Capacity Planning at Ford Motor Company says, inventory is “… dead money.” Your job as an inventory manager is to strike a compromise between conflicting priorities – and almost as importantly, those of your colleagues. Inventory management is a continuous value-driven activity that needs to include all key stakeholders to collaboratively plan, monitor and respond to changes to inventory plans as they happen. The inventory manager acts like an air traffic controller, effectively collaborating with and directing peers in a way that leads to optimized inventory results. And just like an air traffic controller, you don’t always have the required control over key functions – like weather conditions, air speed or even how many flights airlines schedule to arrive and depart. When it comes to inventory management, critical functions like setting safety stock levels, determining order policies and finding ways to reduce lead times and cycles won’t always be in your complete control. So before you set your company’s inventory policies and targets, it’s best to make sure you’ve talked with everyone involved. Here’s a handy checklist of whom you should reach out to in order to get the inventory conversation started.

  • Inventory planner: defines ordering policies and minimizes the costs associated with inventory
  • Material planner: manages the detailed plan for all materials
  • Master scheduler: plans the correct amount of each finished good item at the best time
  • Demand planner: represents customer expectations internally that impact network complexity
  • Capacity planner: determines the production requirements needed to meet demand
  • Distribution planner: ensures the availability of stock for the distribution network
  • Customer service representative: communicates commit dates and order information to the customer

Interested in learning more about successful inventory management? Check out our latest eBook, Inventory management: 5 building blocks to success, to find out how to simplify your processes and get the right people involved from the start.


- August 22, 2017 at 1:20am
Since Inventory management ownership rests with supply chain, normally it is the first one to get blamed either way (excess or shortage) so it is critical that every supply chain owner runs a great SiOP and make sure that all the variations in inventory (DOS) are recorded, aligned and an action plan is built which is agreed by entire leadership team. This way the monkeys are fixed on each and everyone's back and not just supply chain.
It is essential to understand the reasons and conduct a lesson learnt analysis and institutionalise them in the process (SiOP, NPI, EOL, Replenishment) so there is visibility across other functions.
Alexa Cheater
- August 22, 2017 at 9:50am
You're absolutely right Sanjay -- supply chain is often the first place people point fingers at when something doesn't add up the way they want it to, like with excess or shortage inventory as you mentioned. Leadership buy-in and regular collaboration across all business functions (not just those related to supply chain) is critical to keeping everyone on track and accountable for the company's success or failure as a whole. As you noted, that requires visibility and transparency, something it seems many supply chain organizations still struggle with. When all those factors are corrected and come together, the ideal would be that it becomes less about any one team being responsible for a potential issue, and more about how the company as a whole can work together to overcome it and learn from it. Thanks so much for sharing your thoughts!
Dennis Lord
- July 23, 2018 at 8:23pm
I've been thinking that the tasks in your checklist will become the domain of machine learning technology and advanced analytics in the near future. Will I be reaching out to the data analyst to get the conversation started?
Alexa Cheater
- July 26, 2018 at 8:13am
Thanks for the comment Dennis! It's interesting to think that so many of the tasks planners currently perform may be automated by machine learning and AI in the future -- but it's not out of the realm of possibility given the speed at which those technologies are evolving. I think it's an example of how skill sets will shift and collaboration will evolve to include smart machines as much as your human coworkers.

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