Email
sinha.rk.dr@gmail.com
Production targets and Inventory targets have an inherent conflict.
I have seen many companies having a well-defined finished goods inventory target for their Planning team. They also have a production target for their Manufacturing team. These two have an inherent conflict, which often comes in the way of efficient servicing of customers.
How do we control finished goods inventory? If we take an overall systems view, there are two options. If we need to bring down finished goods inventory to improve product freshness, we need to either increase sales or curtail production or both.
Since supplies should be matched with demand in a dynamic manner, production targets should be subservient to the twin objectives of product availability and product freshness. Same applies to the inventory targets as well.
I would strongly recommend checking whether Planning and Manufacturing teams have separate inventory control and production targets respectively. If that is the case, we should move both teams’ targets to the overall customer facing goals of product availability and product freshness.