Many companies experience low inventory turns but relatively poor customer service levels. This is especially true when there are a high number of products and component lead-times are long or fluctuate heavily. The optimal positioning of inventory in the supply chain triggers a significant performance improvement by increasing customer service levels and increasing supply chain velocity. Such an improvement has a major impact on the financial performance of the company.
Key questions
- What is the optimal inventory policy that minimizes inventory holding cost while maintaining or improving serviceability and financial performance?
- Where should inventory of each product or component be positioned?
- What is the optimal safety stock level for each product or component?
Inventory Optimization and SimFlex
SimFlex’s proprietary Inventory Optimizer considers customer demand variability and lead-time fluctuations to define the optimal safety stock levels for each product and component at each site in the supply chain. As a result, customer service levels can be increased, while reducing the amount of capital tied up in supply chain inventories.