Inventory Management – Who is responsible for the outcome?

Inventory management is not always the supply chain manager or inventory manager’s job.  As an organisation, all of us own the function of inventory management in one way or the other. It would be a foolish idea to isolate the discussion and decision making to the supply chain function whereas it is a collective responsibility.

Take the best advantage of one of the main assets of your business means bringing together all the stakeholders from manufacturing, planning and NPI and R&D team to the corner office, and to concentrate on something other than what is in your warehouse.

Re-assess your management practices of inventory can help you to overcome the increase in the cost of the supply chain, the increasing demand and the increasing complexity of global operations. It can also help to increase profits and reduce the risks. The management of the inventory with success returns to a delicate balance between customer service and cost of carrying inventory. You need to have enough of a product to meet the requirements of customers, but not as long as it is at-risk of becoming obsolete or destructs your competitiveness in the marketplace with high carrying cost. As David Thomas, Director of the planning of the global capacity of the Ford Motor Company, the inventory is said “… the money death.”

The primary objective as inventory manager is to find a compromise between the conflicting priorities – and almost as important, those of your colleagues. Inventory management and control is an incremental value-add activity which is driven by all the stakeholders collaboratively in planning, monitoring and reacting and responding to the changes that are required to the inventory management plans.

The inventory manager acts as an air traffic controller, and effectively lead the collaboration with their peers in a way that leads to the optimization of the results of the inventory. And just as an air traffic controller, you do not always have control over the key functions – such as weather conditions, the speed of the air or even how many flights airlines arrive and leave.

When it comes to the management of the Inventory, the essential functions, such as the configuration of levels of safety stock (dynamic or static), in determining the policies and find ways to reduce obsolete material and reduce the cycle time of the inventory lead time will not always be in your control. As well before you define your goals and the policies of the inventory, it is preferable to ensure that you have a collaborative and conclusive discussion with all the key stakeholders in the inventory game.

Here is a handy cheat sheet which one must make use in order to initiate the Inventory conversation.

Executive Team: Sales Manager, NPI Manager, Production Manager, R&D, Economist, Engineering Manager and Supply Chain Manager who will also act as Demand Manager.

Inventory Planner defines ordering policies and minimizes the costs associated with the cost of carrying inventory.

Material planner manages procurement of all required material.

Master Scheduler: based on demand plan, plans to manufacture finished goods and balances between availability of components and production scheduling.

Demand planner: represents customer expectations internally that impact network complexity

Capacity planner determines the production requirements needed to meet demand and also works on established capacity, current capacity and stretch capacity and assists the master scheduler.

Distribution planner ensures the availability of stock for the distribution network with unforeseen limitations of distribution and obstructions.

Customer service representative: acts as a bridge between the organisation and the customer by constantly communicating the product availability date to the customers who will be blind folded otherwise.

Cartoon Source: American Bar Association