Balancing Supply and Demand
When demand is booming and production volumes are at a high, excess product is being built, moved and stored to make sure customer demands will be met. When the economy slows and the orders suddenly get turned off, the reaction time of complex supply chains – due to all the source points and manufacturing points spread out across the globe creating long lead times – has a very damaging effect to the bottom line.
Material is already under process at factories, in transit on ships and trucks, in storage in warehouses and distribution centers throughout the pipeline. So when demand abruptly slows, all players throughout the supply chain are left with excess inventory that gluts the pipeline. This is usually the point when managers start worrying about what to do with all the excess. A day late and a lot of dollars short.
Ironically, the answer in addressing the inventory management problem is not in attacking the inventory itself. That will provide only a short term reprieve. The answer lies in addressing the root causes for the inventory issues such as:
- Demand variability
- Extended response times
- Transportation structure and processes
- Lack of visibility in the supply chain
- Lack of collaboration between partners
- Quality levels and reliability of service from suppliers
All of these root causes drive variability into the system. It is this variability that managers are planning against by carrying more than necessary inventory in the pipeline. Leading organizations have managed to establish means of reducing this variability across the supply chain through superior inventory management.
The CGN Approach
CGN partners with organizations of all types to transform the way they manage their transportation function. We help organizations sustainably reduce inventory through properly managing capacity and demand, while becoming more agile and adaptive to changing customer needs and unforeseen challenges. This results in lower costs, higher profitability, and better customer satisfaction due to the ability to give the customer what they want, when they want it with the utmost efficiency.
Your organization is unique, so should be your solution. We apply our vast subject-matter and inventory expertise to uncover the true issues behind your inventory problem, apply the right tools and methodologies to effectively solve the issues, and work with management and employees to transfer our knowledge to you in order to sustain the gains and create a culture of continuous improvement.
Generally, this is a high-level view of the stages of CGN’s Inventory Management solution:
Find waste and areas for improvement
- Identifying waste in the process from order to delivery that creates no value for the customer
- Identify areas for improvement throughout the process
- Develop an action plan to analyze, fix and sustain proper inventory management
Fixing the problems
- Uncover root causes for the key issues and set target inventory levels
- Select the right tools and methodologies for effective implementation and sustainment
- Implement improvements to reduce excess inventory
Sustaining the changes
- Knowledge transfer to workforce through education and training on new tools and processes
- Create a culture of continuous improvement to sustain progress through a strong learning plan
For more information regarding CGN’s Inventory Management service or to discuss how CGN can partner with you to bring these benefits to your company, please contact: