11 Dec What If You Could Reduce Inventory Up to Three Times with Faster Fulfillment?
Win-win supply chain scenarios that effectively eliminate on-site inventory while simultaneously reducing fulfillment times are few and far between.
When you can figure out such a solution, it’s a game-changer—an implementation of how you do business that changes the way you do business. Inventory on demand (IOD) is a game-changer. It’s a supply chain strategy with your bottom line and your customer’s satisfaction in mind.
Outsource Your Inventory Management to a Trustworthy Third-Party
The supply chain-revolutionizing foundation that supports a successful Inventory on Demand strategy is partnership with trustworthy third-parties. Outsourcing ownership of your inventory to a third-party entity lets that partner handle the stress, overseas complications, and in-country warehouse management challenges that many companies try to navigate themselves on a daily basis. End-to-end inventory management can be realized with the right third-party players in place.
Inventory on Demand Helps Eliminate Excess Inventory Housing Costs
Almost fifteen years ago, Roger Urban repeated H.W. Davis’s observation that inventory levels, not transportation costs, drive supply chain savings. Urban noted that transportation expenses only account for two to five percent of total cost while raw materials, components, and subassemblies typically constitute fifty-five to seventy-five percent of total cost. He quoted Davis from a 2001 Logistics Cost Survey who said, “the difference between the twenty percent of companies that reduced cost and the fifty percent that had an increase was almost fully explained by the inventory level performance.”
Fifteen years ago, Urban and Davis stressed the need for businesses to implement new management strategies that reduced inventory holding levels and allowed for effective calculation of changes in inventory in order to successfully impact supply chain overhead. Today, Inventory on Demand does just that and more.
Supply chain managers with IOD elements in place take advantage of strategically located warehouses around the globe—effectively reducing expensive excess inventory holdings—and responsible IOD servicers do the heavy lifting of procuring, storing, and transporting goods for delivery.
Eliminate Excess Inventory to Improve Fulfillment Times
By allowing third-party servicers to actively manage the flow of inventory, supply chain executives are able to optimize and consolidate essential inventory management processes to save time and money. This means housing goods in strategically-located distribution hubs and being able to time- and place-shift procurement often in-transit, efficiently reducing fulfillment times and providing more accurate inventory management from manufacturer to customer. Many companies neglect to consider their in-transit product as an inventory of goods, but with the proper IOD servicers in place you can essentially bring the warehouse to the customer’s door by buying last minute and fulfilling immediately. Now that’s a win-win.
Eighty-five percent or more of businesses outsource some part of their supply chain management. Think you’re ready for a game-changing supply chain strategy? Allow our team of optimization engineers to perform a free analysis of your supply chain. Click here to request yours today.