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Inventory & Supply

More inventory doesn't necessarily mean better customer service.

Effective inventory management is about having the right materials and products available when they are needed — while avoiding unnecessary stock, excess working capital and waste.

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HMS helps manufacturing businesses understand their inventory and supply requirements, develop practical inventory policies and improve the processes that control material availability.

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The objective isn't simply to reduce stock.

It's to make inventory work harder for the business.

Inventory is a consequence of many decisions.

Inventory often gets treated as a problem in its own right.

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Stock is too high.

So the business decides to reduce it.

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But inventory is usually the result of decisions being made elsewhere.

Forecasting affects it.

Purchasing affects it.

Production planning affects it.

Supplier lead times affect it.

Minimum order quantities affect it.

Customer requirements affect it.

And the reliability of the planning data affects all of them.

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That's why simply telling a business to “reduce inventory” can miss the real issue.

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The more useful question is:

Why do we have the inventory we have?

Availability and inventory have to be considered together.

There is an obvious tension in inventory management.

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Too little stock can lead to:

  • Material shortages

  • Production disruption

  • Expediting

  • Missed customer requirements

  • Increased operational pressure

 

Too much stock can lead to:

  • Excess working capital

  • Storage requirements

  • Obsolescence

  • Increased handling

  • Hidden problems elsewhere in the supply chain

 

The objective isn't to sit somewhere in the middle simply because that feels comfortable.

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It is to understand the relationship between availability, demand, supply and risk.

 

In a recent assignment, inventory management processes including safety-stock methodology were implemented to improve material availability and reduce both stock-outs and material excesses.

Supply problems don't always start with the supplier.

When materials aren't available, the immediate response is often to contact the supplier.

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Sometimes that's exactly what is required.

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But repeated shortages can have other causes.

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For example:

  • The forecast may not provide sufficient forward visibility.

  • Supply parameters may be incorrect.

  • MRP may be generating inappropriate requirements.

  • Purchase quantities may not reflect actual demand.

  • Lead times may not reflect reality.

  • Inventory policy may not match the business requirement.

  • Production plans may be changing faster than purchasing can respond.

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The supplier may be where the problem becomes visible.

That doesn't necessarily mean the supplier caused it.

From demand to material availability.

Inventory and supply management works best when it is connected to the wider planning process.

Demand → Supply Planning → MRP → Purchasing → Inventory → Production

 

A change in expected demand can create a change in material requirements.

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A change in production capacity can change when materials are needed.

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A supplier lead-time change can affect inventory requirements.

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A purchasing decision can create excess stock several months later.

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These connections matter.

That's why I take an end-to-end view rather than treating inventory as a standalone function.

MRP should help — not create more work.

MRP can be extremely useful.

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But the quality of its output depends on the information and parameters supporting it.

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I've developed and reviewed MRP and supply-planning processes, including cleansing material supply parameters and developing MRP to support mid- and long-term material requirements.

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I've also worked with businesses where planning processes needed to be developed around existing ERP systems rather than simply replacing the system.

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The question isn't just:

“What does MRP tell us to buy?”

It's:

“Why is MRP telling us to buy it?”

 

Understanding that distinction can make a significant difference to the quality of material planning.

Purchasing needs forward visibility.

Purchasing decisions are often made under pressure.

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A material is required.

The stock isn't there.

The supplier has a long lead time.

Someone needs to expedite it.

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But effective purchasing should be much more forward-looking.

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Good supply planning should provide visibility of:

  • Future material requirements

  • Supplier lead times

  • Existing stock

  • Open purchase orders

  • Expected demand

  • Production requirements

  • Potential shortages

  • Potential excesses

 

That gives purchasing more opportunity to make sensible decisions rather than simply reacting to today's shortage.

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I've developed forward forecasting and MRP solutions specifically to provide longer-term material requirements visibility and support purchasing decisions and contract negotiations.

Inventory isn't just a warehouse problem.

Physical inventory accuracy matters.

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But inventory management starts well before something reaches the warehouse.

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It starts with the decisions that determine:

What to buy.
How much to buy.
When to buy it.
Where to hold it.
When to use it.

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I've worked on inventory control and warehouse processes as part of wider supply-chain improvement, including implementing controls that identified and brought more than £100,000 of previously unrecorded inventory under control.

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I've also worked across finished goods, semi-finished goods and raw materials, including inventory management across multiple manufacturing facilities.

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The physical stock and the planning process need to agree with each other.

Inventory reduction isn't always the answer.

Reducing inventory can release working capital.

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But reducing inventory without understanding why it exists can simply move the problem somewhere else.

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For example:

Reduce stock → more shortages → more expediting → more disruption → poorer service.

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That's not really inventory improvement.

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It is simply transferring the consequence.

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In one previous assignment, an integrated planning and inventory approach maintained customer-service targets while achieving a 15% inventory reduction.

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The important point isn't the percentage.

It's that inventory, service and supply planning were considered together.

What can HMS help with?

Inventory Policy

Developing inventory policies that reflect demand, supply, service requirements and business objectives.

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Safety Stock

Reviewing safety-stock requirements and the assumptions behind them.

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Material Planning

Improving the connection between demand, MRP, purchasing and production requirements.

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Supply Planning

Developing forward visibility of material requirements and potential constraints.

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Purchasing Processes

Improving the information and processes supporting purchasing decisions.

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Inventory Control

Improving inventory accuracy, control and visibility across the supply chain.

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Warehouse Processes

Developing practical processes to control materials and support manufacturing operations.

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Working Capital

Understanding where inventory is required and where excess stock may be created by wider supply-chain decisions.

When might your inventory and supply process need attention?

You may recognise some of these:

  • Inventory keeps increasing without improving availability.

  • Production regularly runs short of materials.

  • Purchasing is dominated by expediting.

  • MRP recommendations aren't trusted.

  • Safety-stock levels have grown over time without being reviewed.

  • Planners and buyers are constantly firefighting shortages.

  • There is stock on site but the business still can't find what it needs.

  • Inventory accuracy is unreliable.

  • Slow-moving or excess stock continues to accumulate.

  • Different parts of the business have different views of what inventory is actually required.

  • Reducing stock has previously resulted in service or production problems.

 

The question isn't always:

“How do we reduce inventory?”

Sometimes it is:

“What decisions are creating the inventory we have?”

Better inventory. Better supply. Better decisions.

Effective inventory management isn't about having as little stock as possible.

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It's about understanding why the business needs the stock it holds, what risks it is protecting against and where the supply chain can operate more effectively.

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Understand the requirement.
Understand the risk.
Plan the supply.
Control the inventory.

Have an inventory or supply challenge you'd like to understand?

Whether you're dealing with excess inventory, material shortages, unreliable MRP, purchasing pressure or simply a lack of visibility, the first step is understanding what is actually happening.

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Let's have a conversation.

Get in Touch

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