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Tip: Avoid Inventory Inefficiencies through Collaboration

April 23, 2014

Inventory inefficiencies can arise in a company when there is a lack of unity across a company’s distribution centers, both domestic and international. Collaboration as a unified global group could help resolve these inefficiencies as explained in the case study, Inventory Efficiency.

Supply chain redundancies or conflicting priorities in meeting demands between distribution centers often show the absence of internal collaboration within a company’s many outlets.

Collaborated group planning sessions allow for alterations in forecasting to be fact-based and knowledge-driven and can resolve issues of capacity and supply. To achieve this, a company should consolidate the forecasting and demand planning functions into one group with global responsibilities and make planning weekly, cross functional (e.g., sales and marketing, forecasting and demand planning, and procurement), and collaborative.

This allows all of a company’s distribution centers to be on the same page and troubleshoot accordingly. For example, if new changes in demand outstripped a supplier's capabilities, the collaborative team would negotiate to adjust the timing of the demand for the new order or to decrease the demand parameters for less critical items. This change of process can allow suppliers to become more efficient and reliable and it helps the distributor take advantage of volume discounts from suppliers.

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