Multi-stage inventory optimization in the process industries

Focus topic paper of Camelot Management Consultants on Multi-stage inventory optimization in the process industries

For western industrial companies it is hard to compete with low cost countries in terms of material and labor costs. One of the remaining competitive advantages is innovation - including not only the results of R&D, but also more efficient operations. In the area of supply chain management, inventory management continues to be one of the top priorities for many organizations. To maximize profitability it is essential to hold the right amount of inventory in the right place. Unfortunately, despite huge advances, inventories are still unnecessarily high in most supply chains, especially in the process industries. By jointly optimizing inventory levels across the supply chain end-to-end inventory optimization is able to improve inventory cost-efficiency and customer service. The Focus Topic Paper “Strategic Multi-Stage Inventory Allocation in the Process Industry” by Camelot Management Consultants illustrates the key principles and benefits of end-to-end inventory management and pin-points the challenges on the way to true inventory excellence.

According to the Focus Topic Paper almost all companies (86%) see the need to improve their inventory management. “To improve inventory efficiency it is necessary to set up a regular inventory assessment process, integrate the inventory controlling into the existing reporting systems and finally – as the inventory-controlling processes are an integral part of the global planning process – implement a strategic end-to-end inventory management”, says Michail Heinmann, Visionary Officer at Camelot Management Consultants.

„The handling of today’s complex supply chains requires a strategic approach. Modern lean supply chain management provides a means to achieve end-to-end synchronization of the supply chain to improve flow and inventory. However, the need remains to understand how to set safety stock policies within this lean supply chain environment“, says Christoph Lieth, partner and Supply Chain expert with Camelot Management Consultants. The Focus Topic Paper “Strategic Multi-Stage Inventory Allocation in the Process Industry” by Camelot Management Consultants provides insight into how these policies should be set to optimize performance whilst addressing risk, variability and customer service. It gives an overview of the current challenges in the area of inventory management, explains the essentials of different inventory optimization methods and finally demonstrates the potential of end-to-end inventory optimization.

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Download the Focus topic paper here.