We use this information to address the inquiry and respond to the question. To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including: Questions and Inquiriesįor inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. Please note that other Pearson websites and online products and services have their own separate privacy policies. This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site. These inventory measures tell us, for example, how quickly inventory is moving through the supply chain, how likely the firm can handle the fulfillment of customer demands, how the firm’s liquidity is impacted by its investment in inventory, and may even signal how effectively supplier relationships are being managed. Measures such as inventory turns, days of inventory, and cash-to-cash cycle have become popular, as they are all indicators of how well a firm’s supply chain is being managed. This has resulted in industry analysts, supply chain consultants and researchers, and even Wall Street paying close attention to inventory metrics to glean insights about supply chain performance trends and changes. Hence, inventory is an important supply chain measurement tool because it is likely one of the first signs that some root cause(s) is causing supply chain inefficiencies. These are but a few examples of supply chain management ineffectiveness that often manifest in the form of either extensive levels of stagnant inventory or consistent out-of-stocks. Perhaps demand forecasting is constantly and significantly inaccurate, maybe supplier lead times are unnecessarily long, perhaps firm operations are laden with bottlenecks and inefficient inventory handling, or maybe transportation carriers are not providing quality service in the form of delivering inventory damage-free and on-time. The larger issue here, however, is that this safety stock situation is likely a symptom of some sort of ineffective supply chain management decision-making. Such high safety stock is indeed a problem in and of itself because of the costs of holding this inventory and the opportunity costs of having working capital tied up in assets that aren’t being converted to sales. For example, consider the firm that has excessive amounts of inventory in the form of safety stock. Because of this, the status of a firm’s inventory is often used as a litmus test for the overall “health” of its supply chain management processes and decision-making. Learn More Buy Why Inventory Is Such an Important Metric for Supply Chain ManagementĪs initiatives like S&OP illustrate, inventory can be a vital part of managing supply chains. Definitive Guide to Inventory Management, The: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain
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