News

How to Improve Optimization

The world has been in a volatile state for quite some time, much longer than just this past year. However, the pandemic hit our economy hard and in ways that many could not have predicted two years ago. That has caused a shift in thinking for many businesses, especially those that hold an inventory. Consumer demand has been unpredictable, which has left supply chains scrambling to keep up with their next move. This leaves many businesses challenged to find ways to optimize inventory while reducing costs and maintaining the same level of customer service and satisfaction as in the past. In an effort to work towards Inventory Optimization, it is important to understand some of the common challenges facing all industries.

Data is not being managed well. Many businesses have a large amount of data but they do not use it. They may not even know how to use it properly. There are many ways to use their data to make effective decisions for their business. Businesses should really dig into their data to determine the decisions that are driving their customers to make purchases. If they can understand the data, they may be better able to predict what inventory is needed.

Overall company objectives are not in alignment with the individual goals. If those two-goal are not in alignment, the organization can not move forward as one. Most likely, the organization will be working against itself. An example of how this may happen is if an objective is to improve customer service but the individual goal is measured by determining cost savings. Those two do not align with each other. They are really two different items. You should not measure customer service by determining how much money you have saved, even if that saving is passed along to the customer.

Communication seems to be a recurring problem for many organizations. When there is a lack of communication between the business and the customers and suppliers. This is often a challenge for most organizations across all industries. The way this can impact your inventory optimization is when a new product is designed but the steps have not been taken to ensure the appropriate parts and pieces can be procured. When the parts have not been secured, it may require a higher price to be paid to make the product. This could also cause a delay in getting the product to market, which means it sits longer with the business. The longer it sits with the business and not available for sale to the customer means the higher cost is paid by the business for the item.

Steps can be taken to mitigate any of these risks, but first, your organization must recognize that you have these areas of risk before being able to work towards corrective behavior. In a constantly changing environment, it may feel hard at times to keep up. The more flexible your business environment can be, the better off it will be over the long run.

Related Articles

Leave a Reply

Back to top button