Breaking Free from Forecast Dependency: The Power of Inventory Aggregation in Supply Chain Efficiency

Do NOT confuse high stock with good availability.

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Relying on forecasts to measure supply chain efficiency leads to problems.

Many organizations focus on delivering a specific number of inventory.
This is based on a pre-defined plan.
They call it an “efficient” supply chain if they can stick to the plan.

But forecasts, which predict how much inventory is needed, are not always accurate for each store and product at specific times.
So, can a supply chain that follows a fixed plan respond to changes in the market?

By only relying on predictions, we often 𝗲𝗻𝗱 𝘂𝗽 𝘄𝗶𝘁𝗵 𝘀𝗵𝗼𝗿𝘁𝗮𝗴𝗲𝘀 𝗼𝗿 𝘁𝗼𝗼 𝗺𝘂𝗰𝗵 𝗶𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆.

To align the supply chain with actual demand,
we can use an execution process called “𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝗔𝗴𝗴𝗿𝗲𝗴𝗮𝘁𝗶𝗼𝗻”
This means keeping most of the inventory in warehouses.
Sending only what each store currently needs.

This helps replenish stock in locations where it sells faster.
Prevents stock from building up where it doesn’t sell.

For example, if a company has 1000 units of inventory, they can reduce it to 900 units. By keeping 70% in stores (630 units) and 30% in warehouses (270 units).

Stores can have better availability with less stock.

Adjust the supply chain based on actual demand.
Instead of relying solely on forecasts.
Improve efficiency and have better inventory management.