10/11/2024
023. Balancing Customer Service and Your Inventory Investment While Maximizing Profitability (afternoon)
Instructors: Jon and Matt Schreibfeder
Level of Complexity: Intermediate
1:30 PM - 4:00 PM
The goal of effective inventory management is to meet or exceed customers’ expectations of product availability while maximizing your net profits. And when you stock an item, you are making a commitment to have that item available, in reasonable quantities, for immediate delivery. Unfortunately, good forecasts and lead times are not enough to ensure consistent product availability. There will always be situations where you will sell more than you planned to, or you experience a delay in receiving a replenishment shipment. But how do you deal with the exceptional expectations? In this session we will explore developing an effective balance between meeting customer expectations and maintaining a reputation as a reliable supply by effective safety stock (i.e., reserve inventory) planning.
Topics will include:
- Managing your customers’ expectations of product availability.
- Different ways of calculating reserve inventory or safety stock and determining the most appropriate method for your specific situations.
- The effect of more or less safety stock on customer service, profitability and your inventory investment.
- Determining where you can reduce safety stock without harming customer service.
- How you can increase customer service and reduce backorders at the lowest possible cost.
Learning Objectives:
- Establishing customer service level, inventory investment and profitability goals.
- Fine tuning replenishment parameters to achieve your goals.
- Understand how to monitor your performance and make appropriate adjustments when needed.