When you turn on the faucet at home what are your expectations.
Water not later.
Right now in order to do that the faucet the pipes and the city’s water source need an inventory of
So often we think of inventory as stuff on a shelf at the store or perhaps in a warehouse.
Let’s think of inventory as water in a plumbing system.
Let’s say you want a gallon of water out of your faucet.
We all understand that there needs to be a gallon of water in the plumbing system.
But the water can’t be back at the source or a mile from your home.
It has to be right there.
Re to flow out of the faucet the moment you turn the handle.
How about if you want 2 gallons 20 gallons 100 gallons or what you want to fill your pool those pipes
need to be ready to satisfy the customer’s need for water no matter how big or small some of that water
is rated flow right now.
Let’s call that finished goods.
Some will be a mile from your house.
Let’s call that work in process some of that water is still at the treatment plant.
Let’s call that raw materials inventory just like a city must be ready to satisfy the water needs of
So too must the supply chain be ready to satisfy the demand of its customers.
Does your supply chain have enough inventory to satisfy demand today tomorrow next week.
How long does it take from the time your company’s raw materials enter the inventory pipeline until
they come out the other end ready for the customer to purchase.
That is what supply chain managers think about.
Because a supply chain manager that’s responsible for inventory needs to make the customer and the marketing
department happy by always having products in stock marketing folks always wonder well why don’t they
just have tons of inventory.
Well don’t forget a supply chain manager also needs to satisfy the boss by keeping costs low.
Inventory comes with lots of costs.
Of course you have to buy the inventory but you also have to negotiate the purchase.
You have to pay for delivery and store it.
Plus it could get lost broken or stolen at any time.
Inventory is an expensive investment.
And as with any other investment.
Making a mistake can be costly.
Is your company prepared for change in variability.
What happens if a snowstorm hits.
Does your hardware store have enough snow shovels to meet demand.
What happens if a designer’s top dress suddenly goes out of style.
They’re stuck with a bunch of inventory nobody wants.
What happens if a grocery store bought too many tomatoes this week.
Perishable inventory is a big risk.
How about if there’s a fire at your warehouse where will you get the inventory needed to meet next month’s
How about if a stock of Medicine spoils.
How will your hospital treat sick patients.
Managing inventory is a big responsibility.
I mean very often having the inventory available is what sets you apart from your competitor.
So let’s think about inventory plumbing in your company.
How much your company’s inventory needs to come out of that Fosset each day.
Let’s say it’s only 200 units.
How long does it take from the time you buy the raw materials until they are ready to sell to the customers.
Again let’s just say it takes 10 days.
Does your company have 2000 units in the pipeline.
If not you’ll probably run out of stock in the next 10 days.
What happens if there’s a leak in the inventory pipeline.
Are items getting stolen or lost.
How will you deal with those lost units.
Do you have to deal with seasonal inventory parish ability product innovation.
These are all questions to consider as you’re designing your supply chain.
So the next time you go to the store and they’re out of whatever you want to buy.
Remember managing an inventory pipeline is not easy.
That’s why the world needs more supply chain manager.