High inventories lead to committed capital and increased processing costs. In order to identify target areas for inventory reduction, an analysis of planning and management processes along with inventories, consumption and throughput times is essential.
Transit inventories in intercontinental supply chains are growing in importance. Frequent modal changes, the consolidation of goods, customs clearance and procedural restrictions lead to non-transparent, unplanned and longer throughput times. This in turn reduces reaction times and increases reserve inventory levels in intercontinental supply chains, when goods availability is not to be affected. Demands that are either volatile or hard to predict make this an even bigger challenge.
4flow knows how to leverage inventory optimization in global supply chains
Choosing the right transportation equipment is key to the reduction of throughput time and transit inventories. Intercontinental shipment by sea generally results in lower transportation costs – air freight and shipment by rail are other alternatives to consider. A total minimum in inventory and transportation costs can usually be achieved with the right mix of at least two transportation modes.
A frequently overlooked source of transit inventory reduction lies in the shortening of the actual transportation time and the use of multimodal transportation chains. By analyzing throughput times for each processing step, weak points can be identified, thus enabling targeted optimization. Through the selection of the optimal transportation route, 4flow enables a minimization of the transportation time.
Typical results achieved by 4flow in inventory optimization projects include:
- Inventory balance sheet reductions of up to 40 percent
- Throughput time reductions of up to 30 percent
- Transparency on cause-and-effect relationships in existing inventories
- Implementation of sustainable processes to cut down on obsolete inventories
- Increased material availability of at least 95 percent
- Achievement of quick wins, starting within project period
We look forward to hearing from you.