During the recent webinar, Inventory Fitness – Governance, Targets, and Segmentation, we took audience questions and answered them.
Here are some issues that people in industry face and are interested in finding a solution to!
Question 5 of 14
Question:
How should we proceed with inventory optimization? For example, what should be a framework for inventory optimization?
Answer:
Well, that’s an interesting question. For us, the first question that we always ask is, “Is your data sufficiently accurate to allow you to optimize?” For example, if the lead times in your ERP system aren’t accurate, you’re not going to get a good recommendation. If you don’t know where your inventory is positioned, you’re going to have issues.
In essence, what ends up happening is if your accuracy for the data, that you need to do an optimization, isn’t eighty-five percent or greater, it’s likely that you’re only going to do it once because the lift to get all of the data cleaned up is going to be pretty substantial.
So, our recommendation around optimization is first get your data accurate, build a model to figure out how you can get people to act on where you want inventory to be, and then focus on optimization.
Yeah. The old garbage in, garbage out. Right?
That’s right.
Remember, we’d be happy to chat with you about any of this in more detail.
And if you’re interested, check out our schedule for upcoming business process improvement courses that we offer throughout the year to help you achieve business excellence.