5E's Strategy Framework: 5 ways to optimize the inventory
The coronavirus pandemic has provoked abnormal chaos in supply chain planning. Inventory management teams are facing challenges in planning and securing their inventory demands during this pandemic and beyond. It is imperative for organizations to address many critical inventory management challenges at this time.
Organizers are facing challenges, like whether to store more or avoid loading the stock to fulfill the customer's orders for the next few days. And in view of the inconsistency of transport times, organizers need to be made aware of the current stock status, the abundance of stocks, as well as the demands for unique products in the coming days.
Despite implementing the data and process analysis, it turned to be an issue to sort out the relevant execution methodology for supply chain inventory management.
What is supply chain management?
Supply chain management(SCM) is managing the complete production flow of goods or services to improve quality, delivery, customer experience, and cost-efficiency. In other words, SCM begins with designing the raw materials to distributing the final product to the customers.
SCM comprises supply planning, product planning, demand planning, sales and operations planning, and supply management. Typical, supply chain management is composed of six components planning, sourcing, manufacturing, delivery, logistics, returning.
What is inventory management?
Inventory management is a planned procedure for procurement, warehousing, and trading inventory of both raw supplies and final products.
How does inventory management work?
Inventory is the stock or goods a business plans to trade to customers for profit. Optimizing inventory management is crucial for cost-efficiency and it also impacts the supply chain management by affecting the flow of capital, prudent sourcing, vendor management, and customer-vendor relationship. The objective of inventory management is to maintain the right stock in the right place at the right time.
Why is inventory management important?
Inventory is a vital asset to the organization. Managing inventory means gathering all the elements of the supply chain. Insufficient inventory which is on-demand disappoints the customers. However, maintaining a large stockpile costs the storage and ensuring issues, risk of deterioration, theft, and damage.
It's important for organizations to satisfy the customer experience and understanding the things that matter. Companies with sophisticated supply chain and production processes must have the right balance of inventory size. This article presents one of the best execution strategies to enhance inventory management within your organization during this pandemic.
The 5Es is an abbreviation and a checklist for inventory management to endorse various stages of the execution process. This execution strategy framework helps to optimize the inventory more quickly and easily.
Here are the 5Es
Identifying and associating the concerned persons, processes, and technologies of inventory management.
- Maintain the interdependence between the departments dealing with the inventory such as maintenance, manufacturing, demand generation, and logistics.
- Applying the practices as SOPs in compliance with the guidelines laid down by the SOPs by experts. And Collaborating the efficiencies.
Initiating the various metrics for achieving goals and objectives.
- Determining the RACI matrix for stakeholders like who is responsible, accountable, consulted, and informed regarding the different operations in the organization. And discovering SOPs, policies, and governance within the system.
- Discovering meta and master data, as master data alone is insufficient for analysis and developing data quality metrics.
Launch the implementation of the above-mentioned point by
- Refining and reviewing organizational KRAs, KPIs, and SLAs regularly.
- Exercising awareness-raising activities and improvements in process augmentation and data quality assessment of results.
- Incorporate risk management techniques and methods to mitigate those risks.
Rendering necessary guidance for the design of follow-up ventures or strategy review.
- Guiding the stakeholders
- Upgrading the systems, technologies, and platforms as per the trends.
Attentively monitoring the outcomes of the initial strategic operation.
- Conducting regular audits for data and governance.
- Immediately assess the maturity of data and process consistency.
Inventory optimization is quite challenging as it is the core area of operations that companies are striving with, to achieve the best approach to manage their supply chain. Incompetent inventory management ruins the business, absorbs capital, and increases downtime. Implementing the best inventory management practices improves productivity and profitability.
The 5E's execution strategy recommended by PiLog can be implemented for any value chain management. With a powerful inventory management system in your organization, you can reduce costs, keep your business productive, explore sales design and anticipate future deals, and setup a business for the unplanned. With the right inventory management framework, a business will have a superior opportunity for benefit and endurance. It’s time for your organization to get a rip on your inventory management system and start implementing it today.