Fixing Inventory Non-Availability Beyond Demand Planning
When The Shelf Is Empty: Inventory Non-Availability
Part 2 of a 3-part series, Decomposing Customer Service Failure
In Part 1, we covered Order Inaccuracy issues that drive failure – failures that happen before the order even gets to the supply chain.
In this part, let us examine the most favorite punching bag: Inventory Non-Availability. The C-suite is not wrong to blame the inventory issues, however, they are wrong to tread the “we didn’t have it” as one problem with one owner, usually the Demand Planning group followed by an SOS call to ramp up inventories to address customer service issues.
Inventory non-availability can be due to any of the following:
- Forecast Error and lack of demand visibility: WMAPE, Bias and FVA
- ๐ฆ๐ฐ๐ต๐ฒ๐ฑ๐๐น๐ฒ ๐๐ฑ๐ต๐ฒ๐ฟ๐ฒ๐ป๐ฐ๐ฒ: MPS compliance Target >= 98%; 95% acceptable
- ๐ฆ๐๐ฝ๐ฝ๐น๐ถ๐ฒ๐ฟ ๐ฅ๐ฒ๐น๐ถ๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ ๐๐ฃ๐: Supplier OTIF % ยท Target โฅ 98%
- ๐๐ป๐๐ฒ๐ป๐๐ผ๐ฟ๐ ๐ฃ๐ผ๐น๐ถ๐ฐ๐ ๐๐ฎ๐ฝ ๐๐ฃ๐: Stock-outs due to poor policies and lack of IO
This last one is really the lack of proper technology and knowledge gap that exists in the supply planning organization. A perfect forecast converted to an ineffective MPS plan.
#MAPE #MPS #OTIF #supplychain #analytics #metrics
Inventory non-availability is not exclusively a demand planning or supply chain problem. It is a demand-supply integration challenge, and integration is an organizational discipline. This also needs the due diligence to drill this into the various root causes with a monthly cadence.
Measure to Mature!
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