We need to use the below execution processes to align supply chain with actual demand:
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Store inventory higher up the supply chain.Β
Give only as much inventory as is the immediate need of the store. Keep rest of stock in warehouses.Β
This will allow the stock to get replenished to locations that sell faster. It will prevent stock from getting accumulated where it does not sell.
This will also allow you to have much better service level with lesser total stock!
For instance:Β
A company has 1000 units of inventory.
90% of stock is in stores (900 units) andΒ
10% of stock in warehouses (100 units).Β
After aggregating inventory, the company can reduce their inventory to 900 units with
70% of stock in stores (630 units) andΒ
30% in warehouses (270 units)
Almost in all cases, we have heard users say that stores have much better availability. With lesser stock!