Taking an Optimized Approach to Inventory Management

Sometimes we forget the basics when thinking about inventory optimization, but as AMR Research and others have noted,organizations hold inventory for three basic reasons. First, because it takes time to make and move products, inventory is needed as work-in-process and in-transit material. Second, safety stocks protect companies against changes in demand, production yield and forecast errors. Third, inventory can, at times, protect companies against price increases and provide other economic advantages.

Sometimes we forget the basics when thinking about inventory optimization, but as AMR Research and others have noted,organizations hold inventory for three basic reasons. First, because it takes time to make and move products, inventory is needed as work-in-process and in-transit material. Second, safety stocks protect companies against changes in demand, production yield and forecast errors. Third, inventory can, at times, protect companies against price increases and provide other economic advantages.