Presentations – Strategic

Inventory Drivers

Inventory –Most organizations have a love / hate relationship with it.   So, why do we have inventory in the first place?  We keep inventory because it is cheaper to have it than not have it.  You need to have lots of inventory so you can respond faster to customer requests yet you can’t have more than absolutely necessary because the cost is too high.

But what is the “right” amount of inventory and how do we control how much inventory we have?  The first thing we have to understand is that inventory is a symptom, not a cause.  By that I mean that we have inventory in response to other factors and there are many factors or, as I call them – Inventory Drivers.  There are many different drivers such as accuracy (inventory, forecast, production…), lead time, batch size, financial directives…  Keep in mind that the relative importance and effect of each of these drivers changes with each organization, over time, with changes in the economy, with changes in the competitive environment and any of hundreds of other factors.  This means that there will never be a list of 5 or 10 things to do that will guarantee perfect inventory management.  It is the combination and interaction of these drivers that drives your inventory levels up or down.  By understanding and controlling these drivers we can control our inventory levels.

Join me to discuss what these factors are, why they influence the inventory levels and how they interact to bias the results of the individual drivers.  Well there are many different drivers in this presentation, which specific drivers we discuss will be decided by the participants during the presentation.