supply chain expert

Stage 3 Inventory

In this stage, you are going to consider the storage of your raw material, parts or components, as well as your products. You should at least answer the following questions:

· What do you need to store? Are the storage of dependent of independent demand? How much of each item are in demand annually or monthly? How much is the value of each item in storage? How about the total value? How will you classify your inventory?

· Given that inventory carrying cost takes 30% of the value, according to the estimated demand from Stage 1, how many orders should you make annually for each inventory item, respectively? How long is one order cycle of each inventory item, respectively? How much will you spend on inventory in terms of inventory carrying cost and ordering cost, respectively and totally?

· Will you need safety stock? How much inventory appropriately do you need as safety stock? How do you decide the safety stock level?

· How will you manage your inventory and order as a demander/customer? How will you fulfill your customers’ order as a supplier? What strategies will you use? (JIT?VMI?) How will those strategies benefit your business? What are the difficulties in applying those strategies? How will you overcome them?

· How is your material flow like both inbound and outbound side? Where is your business located in the supply chain? Is your supplier a local one or distance one even abroad? Are you a local supplier? What will the location affect the way you do your business?

· How will you deliver your products/services to your customers? Will it make any change to your distribution channel when lockdown in the pandemic? In what aspects can lockdown affect your business?

· According to your inventory and safety stock level, how will you obtain your storage space? Will you rent a warehouse, utilize your own space, or decide to turn to a 3PL warehouse? Why do you make such decision? How will the decision affect your total logistic cost?

· What functions do you expect your warehouse provide? (e.g. accumulation? Sortation? Or value-adding functions?) Why are those functions important to your business? What material-handling activities will be involve under those functions? What will you do (manage warehousing by yourself) or what will you suggest your warehousing provider to do to provide effective and efficient warehousing service?

· How will you set criterion to assess the distribution performance? What indicators are more important to your business as well as your inventory items than others? Why?