Best Practice Inventory Management
Managing inventory in the supply chain is critical to ensure high customer service levels, as well as reduce the amount of unnecessary inventory sitting in the warehouse. There are several best practices which are currently used to reduce inventory levels and logistics costs.
Web based inventory management software offers traceability or genealogy capability. See Inventory and warehouse management for more applications.
In general, these practices provide inventory users with the capability to order supplies as they are needed and then delivering those items directly to the customer within hours after the order is placed ("just-in-time"). Ordering supplies only as they are needed, combined with quick logistics response times, enable companies to reduce or eliminate inventory levels, buy only the items that are currently needed, reduce or eliminate the possibility of inventory spoilage or obsolescence, and reduce overall supply system costs.
What are these best practices? 3) The integrated supplier. An integrated supplier assumes almost total inventory management responsibilities for a customer. This is the most aggressive form of a supplier partnership where a
supplier representative works in the customer’s facility, ordering supplies as they are needed, and replenishing storage locations. Inventory is stored by the supplier in the supplier’s warehouse until ordered and then delivered on a “just-in-time” basis.
1) The prime vendor. A single vendor, or prime vendor buys inventory from a variety of suppliers and stores the inventory in it's warehouse. This concept is characterized by a close partnership between the prime vendor and customer.
2) The local distribution center. One or more suppliers locate a distribution center within close proximity to their customers. From this location, the supplier delivers items to the customer within 24 hours or less of receiving an order. The supplier is linked electronically with the customer via software (SRM, or supplier relationship management).
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