We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2022
    • Upload Your Video
Home » a swirl of contradictions
outbound

a swirl of contradictions

May 1, 2007
Mitch Mac Donald
No Comments

It was tough to ignore the swirl of contradictions in the various media reports that came pouring in last month. For instance, how do you reconcile the insistent warnings about global warming with the wintry blast that swept across large swaths of the country several weeks into spring? Or the public calls for the firing of a shock jock for bigoted remarks by leaders who have been heard making equally disgusting comments? Or criticisms leveled at a restaurant chain that began reducing portion sizes (in deference to its customers' waistlines) for not giving those customers much value for their dollar?

I was reminded of all this as I began preparing for a panel I moderated during the Logistics and Supply Chain Forum earlier this month. The more I thought about the panel topic—best practices in inventory management— the more I struggled to resolve the classic inventory conundrum: When it comes to the "optimal" level of inventory, what one part of the company considers optimal will invariably be seen as anything but optimal by another.

Take the sales force, for example. From the sales group's point of view, there's no such thing as too much inventory. If a customer wants it, you have to be able to deliver it—in whatever color, size, or configuration the customer wants. If you can't, you're likely to lose the sale.

The folks who manage the finance and logistics side of the operation, however, would counter that there's no such thing as too little inventory. From their perspective, inventory ties up working capital and presents a perennial risk of aging or obsolescence. As my fellow panelist Tim Miller, vice president of operations at Security Contractors Inc., notes: "The sales team wants everything on the shelf all the time, and we know that isn't necessarily optimal."

Another panelist, Mark J. Lynch, group director of supply chain development for the Coca-Cola Co., says he approaches the "optimal inventory" question by dividing inventory into three categories. "You have to be able to sort out the good, the bad, and the ugly," he says. The good inventory is merchandise that can be whisked straight through the supply chain from point of manufacture to the end consumer, spending virtually no time on a shelf. The bad is the merchandise that's brought in on a just-in-case basis—as opposed to, say, a just-in-time basis—as a hedge against delivery problems or flawed demand forecasts.

The ugly is the inventory that piles up in a warehouse somewhere because nobody wants it. It's usually a reflection of poor internal coordination and communication—think of a company where manufacturing keeps pumping out vast quantities of goods in order to leverage economies of scale even though the warehouse is already bursting with the stuff. "The goal is to set things up so you have as much of your inventory as possible in the good category," says Lynch. "You want to minimize the bad, and stay as far away as you can from the ugly."

Rashid Shaikh, senior director of global supply chain at Nypro Inc. and another panelist, agrees. The key to smart inventory management, he says, is to take an enterprise-wide view of the matter and "make sure you leverage your entire network." Shaikh himself follows this four-step approach to balancing inventory and demand: Analyze the current state of affairs; establish clear goals; measure progress against those goals; and remain open to change.

Among other virtues, that approach has the advantage of being both simple and straightforward. Maybe we could use it to resolve some of the messy contradictions that abound in the greater world beyond logistics and supply chain management.

Supply Chain Services Business Management & Finance
  • Related Articles

    just a matter of time: interview with George Stalk

    a little bit of this, a little bit of that

    a series of fortunate events: interview with Susan Rider

Mitchmacdonald
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

Recent Articles by Mitch Mac Donald

20 years later, the question remains the same: Are you up to SPEED?

Hail and farewell: interview with Gail Rutkowski

Thought I’d something more to say …

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Private equity firm acquires packaging provider Coregistics in e-commerce bet

  • Trucking industry warns that AB 5 decision could push freight capacity out of California

  • Packaging industry reprioritizes amid inflation, supply chain disruption

  • Warehousing's perfect storm

  • Raymond Corp. marks 100th anniversary

Now Playing on DCV-TV

E3f9e6d5 8bd4 40ca 8c7f 43aa63ea3fc9

Lessons from CSCMP’s Annual Report Card for Shippers and Carriers

DCV-TV 4: Viewer Contributed
Recently, the Council of Supply Chain Management Professionals (CSCMP) released their 33rd Annual State of Logistics Report which is created by AT Kearny. I've viewed this as basically a "Report Card" for shippers and carriers since it offers a comprehensive view of what they both have dealt with in the past year,...

FEATURED WHITE PAPERS

  • Breaking Bad: Conducting Full Truckload RFPs in the Age of Digital Freight Procurement

  • Fueling Sustainability for Manufacturers: Strategies to Increase Fuel Efficiency and Reduce Your Carbon Footprint

  • Guide to Proven Warehouse Solutions

  • Five common misconceptions about running a private fleet

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2022. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing