January 31, 2011 Leave a comment
The article in the WSJ on Thursday, January 27, 2010, discussed the need to find the right level of stock to maximize profits. The article noted the strategies employed by Kimberly-Clark, Harley-Davidson, 3M, Monro Muffler Brake, and Union Pacific. The consensus was to carefully review inventory levels in the context of weak demand.
We would also recommend that the firms review the decision-making models around what inventory to stock and also the algorithm for establishing min-max levels. We have found that this analysis plus process value stream mapping will get firms to the right answers.
Different programs for sub-tier suppliers such as buy-back programs, JIT-type stocking plans, and vendor managed inventory could also spread the risks through the supply chain.