Reading Kerry Zuber’s white paper, “Inventory management: inventory rationalization and right sizing strategies“, I was struck by the increase in complexity of inventory management in an outsourced environment.  It’s a little like coordinating the neighborhood barbeque rather than planning your own dinner party.   While a dinner party can certainly be a lot of work, I’ve always found it less risky to personally invite my guests, do my menu planning and food shopping, and prepare the meal itself.  “Demand planning” is easier, as I’m talking directly with the people involved, and I know they’ll let me know as soon as they can if their plans change.  There still may be some short notice guest additions, or some people may have food allergies, bigger than usual appetites, etc.  But it’s not so difficult to plan for this level of variation.  I  can buy some extra ingredients, or even prepare an extra main course, as I have visibility of how  I might use this “safety stock” in the future in my own kitchen.  And I know what’s in my fridge and can usually come up with some alternate dishes for those surprise vegetarians in the group.

But consider the neighborhood barbeque where people are a little more casual about communicating their intent to attend (who do they tell?), and  responsibility for food provision is dispersed.  Food supply is riskier when, say, Chris and Anne have a family emergency and are called away, and Dave and Lynne bring along their young daughter Katie’s T-ball team to celebrate an unexpected victory.  Is there enough of the right food?  Do you feed steaks to these young girls when hot dogs were planned for the kids?  And, by the way, volume and food mix  aren’t the only problems, as no-show Chris and Anne were the sole providers of both the buns for the hotdogs and the chips to scoop up Marg’s special home-made salsa–a very real “supply disruption”.   There’s a looming disaster here.  A combination of the inventory planning strategies that Kerry alludes to may apply:  extra hot dogs ready for cooking, extra steaks (perhaps still frozen at the contributing families’ homes) available for further prep if needed, multiple providers of low cost hotdogs and buns.  But most critical of all is the overall coordination to ensure that inventory management at each level of the neighborhood supply chain is considered so no one goes hungry.

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Tags: Inventory
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