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Inventory mismatch at depots is a major stress point for most companies.
Supply Chain teams strive to match supplies with demand at the invoicing depots. However, most of them experience continual mismatch of inventory… stockouts in some depots and surplus inventory in others. It is ironical that the same product creates both these types of stress.
In most cases, the mismatch is not due to shortage of overall inventory. That’s why it can’t be corrected through changes in production plan and schedule.
The main reason is using monthly forecasts for inventory deployment. Forecasts which were done many weeks ago. Forecasts which are stale now. Markets have changed. Demand has shifted.
More sophisticated forecasting models and adding more demand drivers are unlikely to solve this problem. Markets will continue to evolve and shift. Monthly forecasting just can’t capture these shifts.
What we need is continual update of the demand outlook. Catch the demand shifts early. Revise the near term demand outlook for each depot. And use continuous replenishment for inventory deployment.
If you are still using the monthly forecasts for inventory deployment, it’s time to make it more dynamic. Stop firefighting…