NBDS Inventory Management Whitepapers

Centralized vs Decentralized Inventory Management

Category: Mars Users

There is a key issue relative to Inventory Replenishment Management at companies with multiple warehouses or stocking branches. Do you let each of the locations manage their own inventories, or do you create inventory replenishment purchase orders centrally for each location with only a minimum of input from the separate locations? A summary of the advantages and disadvantages to the two options are generally as follows:

Inventory Replenishment Challenges in the Distribution Industry

Category: Inventory Management

Supply chain management is the attempt to optimize the entire process of manufacturing the product, right down to the point of its consumption, and all the stages in-between. In fact, the central theme of supply chain management is looking at the entire sequence as an integrated function, rather than looking at each link as if it is unrelated to the other. Moreover, each link in the chain has to be analyzed to insure that it is providing sufficient value added to compensate for its position in the chain and the resources it consumes.

The Relationship of Fill Rates to Inventory Levels in Inventory Replenishment Forecasting

Category: Inventory Management

There is a very definite relationship of fill rates to the amount of inventory being stocked. Generally, as more and more inventory is added, the fill rates of customer orders will increase, but at an ever decreasing rate (e.g., as you get closer to the theoretically impossible 100%, fill rate improvement is harder and harder to come by for the same increment of added inventory). Exhibit A below illustrates this relationship graphically. There are no quantities on the X axis, since there are many other factors, unique to each specific company, that drive the exact shape of the curve, but the general concept is valid across the board.

When should you force an inventory replenishment order to be a full truckload (FTL)?

Category: Inventory Management

Distributors are frequently faced with the dilemma of whether they should force an inventory replenishment order up to a full truck load in order to achieve a better shipping rate. In some cases the freight charge is a flat dollar amount regardless if the truck is filled or not. In this case a partially filled truck will create a greater freight cost per unit shipped. In other cases, the vendor will grant freight pre-paid if a full truck load is shipped at once.