SUPPLY CHAIN MANAGEMENT: INVENTORY VELOCITY AS A KEY TO SUPPLY CHAIN SUCCESS
Keywords:
Inventory Velocity, Agile Supply Chain Model, Lean Supply Chain.Abstract
Effective inventory management is at the core of supply chain management excellence. Supply chain management addresses the management of materials and information across the entire chain from suppliers to producers, distributors, retailers, and customers. In recent years the recognition that the supply chain is a source of competitive advantage has driven organizations to pursue the dual goals of achieving both value advantage and operational excellence. It has been recognized that competition in the future will not be between the individual organizations but between the supply chains they are part of.
Supply chain management has been defined as “the management of upstream and downstream relationships with suppliers, distributors and customers to achieve greater customer value-added at less total cost when this is achieved organizations become more agile and responsive.
Often, supply chain performance and customer service results correlate to inventory. Inventory-lack of velocity, poor turns and money tied up-is both a problem and a symptom of a problem. It does not matter where the inventory problem resides-in raw, WIP or finished goods. The issue is not just a matter of managing the inventory on-hand. It is a matter of how to improve supply chain and customer service while improving inventory-velocity and turns and reducing cost-at the same time.
In this paper the issue is how to optimize the dispersion of goods and services to the marketplace, namely inventory velocity management will be discussed. A lack of “velocity” can impact a company’s ability to make and implement quick yet strategic decisions, optimizing the inventory management both upstream and downstream activities.
Agile supply chains model is defined from beginning to end their ability to rapidly, and cost-effectively, respond to change as enabled through the seamless flow of information from the market and across the supply chain. Agile concept is often discussed in conjunction with “lean” chains; we cannot avoid addressing this as well. Lean supply chains focus on the elimination of waste.References
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