Smart-Purchasing.com: Best Practices: Checklist

Best Practices: Planning
Optimize Inventory

Traditional	Best Practice
Stocking levels (min/max) set by gut experience Variability of demand considered Safety stock set globally from rule of thumb Inventory levels set independent of purchasing total cost	Order point and quantity calculated statistically from analytical forecasts Variability of demand and lead time analytically incorporated Safety stock set to reflect true cost of individual item stock out Inventory levels set in conjunction with total cost of ownership decision making Forecasts shared with suppliers

Rationale
Minimize inventory costs in conjunction with total costs Utilize proven tools/techniques Reduce suppliers' production cost through reliable forecast
Details
Modern inventory management and logistics models allow for accurate need forecasting and inventory optimization. An important aspect of this technique is developing steady communication with suppliers to ensure timely and reliable delivery.

Best Practice | Case Study | Commentary