Inventory optimization is a key strategy to ensure the smooth and effective functioning of any supply chain.
The entire crux of the matter lies in maintaining optimal levels of stock at the right location at the right time in order to meet supply chain demands efficiently.
However, managing inventories is not an easy task when your enterprise is operational at multiple levels and demand and supply dynamics are constantly changing.
Multi-echelon inventory optimization enables businesses to keep the right levels of stock in accordance with multi-echelon planning, ensuring inventory optimization throughout the supply chain distribution networks.
Implementing multi-echelon inventory optimization brings cost-efficiency in operations and helps manage supply chain volatility better while contributing to customer satisfaction.
Safety stock is the inventory held in a storage location to compensate for fluctuations in demand and supply.
These fluctuations are caused by factors such as varying customer demand, forecast errors, and variability in lead times for raw materials or manufacturing.
Every layer of a Supply Chain is called an 'Echelon' and when the inventory is stored at multiple layers, (Example: Factories, Mother Warehouse, Child Warehouse, etc.) the inventory placement becomes multi-echelon.
Download the white paper and discover the concepts of multi-echelon inventory optimization and how a mathematical perspective can solve the real-world challenges in inventory optimization.