The Future of Inventory Management

AndrewDunbar

The future of inventory managementThis post concludes my inventory management blog series.

Throughout this series I’ve proposed an elevated role for the inventory manager that challenges the assumption that an inventory manager is a victim of his colleagues’ business decisions and plays only a limited role in formulating inventory results. Inventory management is not a stand-alone business process that occurs after other processes are complete. It is a high-level process that should be integrated into other supply chain planning processes including, at a minimum, sales and operations planning, master production scheduling and supply action management. Inventory managers should support multiple business objectives and should have business integrated targets related to inventory levels, customer service levels, total inventory cost, and inventory quality.

The inventory manager needs to act like an air traffic controller, effectively collaborating with his management peers to guide and coordinate their processes together in a way that leads to optimized inventory results. They should be able to update safety stock and order policy settings, and they should be able to collaborate on improvement initiatives related to lead-time optimization, supply and demand variability, and supply chain agility. It’s important for the inventory manager to have strong analytic skills and a deep understanding of the principles of supply chain management as a successful inventory manager will understand how to meet his targets without negative consequences in other areas of the business. The company should support the inventory manager with access to continuous learning resources and development courses to ensure they stay current and can take advantage of recent industry advancements.

The planning system should embrace the complexity of the inventory management process by offering advanced configuration options, but should minimize the complications by providing simple and standardized business processes. The planning system should visualize business goals, predict performance and exceptions, and prescribe realistic resolution options. The inventory manager’s dashboard should help them to understand the complex relationship between multiple business processes, and help them to identify and address high-priority improvement opportunities. The basic daily process for the inventory manager should be to sense the current status of the inventory plan, assess any exceptions or opportunities, formulate a response, recalibrate based on the predicted results and collaborative input, deploy the changes to the planning system, and document any assumptions or notes to learn from the results.

The inventory management survey we completed last month highlighted that the inventory manager’s role varies widely from company to company, and that they often only have limited authority to impact their company’s inventory results. How does your inventory manager’s role compare to the one I’ve described here? With that answer in mind, I’ll ask again: Are you getting the most out of your inventory management process?

Don’t agree with the role I’ve described here? Are there business goals I’ve missed that the inventory manager should be accountable for? Please share your feedback with me in the comments below.

Interested in learning more about inventory management? Check out the rest of the blogs in this series.

 

AndrewDunbar

Andrew joined Kinaxis in early 2015 as a solution blueprint developer after working primarily in business analytics in aerospace and electronics manufacturing. He now works with product management to convert business requirements into product solutions, while facilitating ease-of-use for customers. Andrew holds a Masters of Applied Science in Mechanical Engineering from Carleton University in Ottawa, Canada.

More blog posts by Andrew Dunbar

Discussions

  1. Very well said! Your’s is the first article I’ve seen to support the idea that a good inventory manager can solve many of a company’s inventory issues…by himself…if given the tools. The air traffic controller analogy is good and goes to the core of the dove-tailing that is mandatory with sales, production and traffic to make the entire flow work as a seamless unit. There must be a true teamwork effort to make the many variations of product demand, production and eventual ship out go as smoothly as possible. Glad to see someone recognized it.

  2. For any business, management plays a very important role. The broad management section has this inventory part that creates better prospect for the business and needs to be managed with utmost care and expertise. The time was gone when you do the inventory tasks via old machines. Mobile devices replace old machines drastically for inventory management that run an entire inventory control process smoothly.

  3. Thanks for the comment Stella. I agree that mobile devices empower the inventory planner to allow them to rapidly respond to new challenges wherever they are (out in the warehouse or at the coffee shop). Their software tools need to empower this behavior.

  4. Andrew, Agree with your thoughts and i have met and seen a lot of companies still not able to see inventory management as key role in their supply chain. But it is changing as complexity is growing and “time” is getting shorter, what leads to more attention to inventory management. See how walmart and amazon manage their business. Best way to get buy-in, i have experienced, is to take the CEO, COO or best CFO on the floor and explain what money his company is loosing due to missed sales, bad quality of operations or decreased value of inventory. Not even mentioning the loss of money due to use of more resources than needed

  5. Thanks for the feedback Frans. The amount of waste that can be generated by poor inventory management practices can be staggering! I agree with you that you can’t solve the problem if you can’t raise executive awareness to the impact of the problem. In my past role as a supply chain analyst at an aerospace manufacturer, nothing made the problem more real than a trip out to the shop floor and wiping a thick layer of dust off of thousand dollar components that had been sitting idle for a year or two!

    A shop floor tour can really open eyes, but your planning system of record needs to help identify these issues without that trip to the warehouse, and should help you drive improvements across your entire network. With the growing complexity you mentioned, you need a digital solution to optimize your inventory!

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