If you have followed my writing at all, you already know I am the great advocate of Supply Chain Control Towers. Why, because they provide such great VISIBILITY into the whole supply chain. That easily translates into reduced supply chain costs. Let’s see how! In Part 1, we examined Supply Chain Visibility: A Critical Strategy to Optimize Cost and Service
I have found some good ideas on how visibility can cut supply chain costs from consultant John Berry.
There are plenty of sophisticated methods and algorithms out there to help calculate safety stock levels. However without good supply chain data, it’s almost impossible to implement any kind of rigorous inventory management process.:
- The unfortunate reality is that organizations frequently don’t have precise information about on-hand inventory counts. This could be caused by a less-than-reliable ERP or WMS implementation. Data latency is another common culprit for inventory blindness. Often inventory data is processed in batches. In a high velocity distribution center operation, even a 15 minute batch window can cause huge distortion on on-hand inventory counts. In fact it’s common to see daily, weekly or even monthly inventory reconciliations. Often organizations outsource fulfillment operations to 3PLs without properly thinking through data integration. And often, inventory visibility is completely based on an emailed spreadsheet! Keeping safety stock to offset bad processes is completely wasteful.