The Future of Inventory Management
Throughout this series I’ve proposed an elevated role for the inventory manager that challenges the assumption that an inventory manager is a victim of his colleagues’ business decisions and plays only a limited role in formulating inventory results. Inventory management is not a stand-alone business process that occurs after other processes are complete. It is a high-level process that should be integrated into other supply chain planning processes including, at a minimum, sales and operations planning, master production scheduling and supply action management. Inventory managers should support multiple business objectives and should have business integrated targets related to inventory levels, customer service levels, total inventory cost, and inventory quality.
The inventory manager needs to act like an air traffic controller, effectively collaborating with his management peers to guide and coordinate their processes together in a way that leads to optimized inventory results. They should be able to update safety stock and order policy settings, and they should be able to collaborate on improvement initiatives related to lead-time optimization, supply and demand variability, and supply chain agility. It’s important for the inventory manager to have strong analytic skills and a deep understanding of the principles of supply chain management as a successful inventory manager will understand how to meet his targets without negative consequences in other areas of the business. The company should support the inventory manager with access to continuous learning resources and development courses to ensure they stay current and can take advantage of recent industry advancements.
The planning system should embrace the complexity of the inventory management process by offering advanced configuration options, but should minimize the complications by providing simple and standardized business processes. The planning system should visualize business goals, predict performance and exceptions, and prescribe realistic resolution options. The inventory manager’s dashboard should help them to understand the complex relationship between multiple business processes, and help them to identify and address high-priority improvement opportunities. The basic daily process for the inventory manager should be to sense the current status of the inventory plan, assess any exceptions or opportunities, formulate a response, recalibrate based on the predicted results and collaborative input, deploy the changes to the planning system, and document any assumptions or notes to learn from the results.
The inventory management survey we completed last month highlighted that the inventory manager’s role varies widely from company to company, and that they often only have limited authority to impact their company’s inventory results. How does your inventory manager’s role compare to the one I’ve described here? With that answer in mind, I’ll ask again: Are you getting the most out of your inventory management process?
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