The traditional focus of inventory management has been on inventory levels with a focus on safety stock. This has had diminishing returns. As network design technologies mature, there is an overlap with multi-tier inventory optmization technologies and network design software. There is also a shift from a sole focus on inventory levels to a focus on form and function of inventory within the network. This includes the design of the network for placement. The key question is "Where should inventory be placed, and what is the optimal form and function of inventory in network design?"
- Form: Raw materials, semi-finished goods, finished goods
- Function: Cycle stocks, safety stocks, seasonal inventories, promotional inventory, intransit inventories, and minimizing slow and obsolete inventory.
- Placement: In the network at a supplier, intransit inventory on a mode of transportation, inventory in your distribution center, inventory in the channel or inventory at a third-party logistics network.
I think that the biggest opportunity lies in the management of cycle stock and the design of inventory strategies in the network. I think that the singular focus on inventory levels and safety stock is outdates. What do you think?