Assessing progress on inventory control

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Ask companies what they want from their supply chains and top of the list is likely to be better availability coupled with a reduction in inventory.

So the results of a new survey by Tompkins Supply Chain Consortium makes pleasant reading.

The report, entitled Finished goods inventory management, presenting growth and adaptation through metrics, is based on a survey of retailers, manufacturers and distribution specialists.

It found that sales growth, as well as the availability of better tools and technologies, has helped drive a reduction in finished goods inventory levels over the past two years. And, despite the cuts in inventory customer satisfaction has not gone down.

In fact, says Bruce Tompkins: “Customer satisfaction levels in the finished goods industry, as measured by order fill rates, have actually increased over the past couple of years.”

And it is apparent that there has been a rise collaboration and sharing of responsibility in general across companies when it comes to inventory since Tompkins carried out a similar survey two years ago.

“Different departments such as forecasting, sales and manufacturing are more accountable for inventory levels,” says Tompkins. “This may be due to S&OP processes increasing their cross-functional role for setting inventory targets.”

Nevertheless, there is no room for complacency. It warns that while a majority of those surveyed already have an S&OP process in place, the success level of their processes is unclear.

And it says that significant change is still needed in the areas such as processes, inventory policies, suppliers and people.

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