In a new study, Think Outside Your ERP: Mission-Focused Inventory Strategies, Booz Allen Hamilton asserts that new challenges are impacting the efforts of government agencies and their business partners to optimize inventory performance. The study explores why traditional approaches to managing inventory often don't work for government entities and uses case studies to show how more effective strategies can be developed.
"Traditional inventory optimization tools such as Enterprise Resource Planning (ERP) are effective for managing high-volume consumer inventories with high turnover ratios," says Booz-Allen. "But their success is uneven when addressing large government organizations with less homogenous inventories, unique mission requirements, less predictable demand, and a mandatory need for higher levels of service."
Many of these organizations have developed mission-focused inventory strategies that begin by defining the role of inventories in supporting the agency's mission. The report outlines four basic roles, each requiring a customized inventory stocking and replenishment strategy: Consumer/retail inventories; schedule inventories; emergency inventories; and break/fix repair parts inventories.
The report details how an organization then aligns its inventory strategy with its mission to help increase service-level performance and reduce costs. But to achieve ultimate success, the strategy must further target the specific roles and geographies the organization serves.
Although inventory optimization is important, the report emphasizes that it's just the first step in a broader supply chain strategy that includes planning for sales and operations; optimizing supplier performance; and leveraging various strategies for deployment and replenishment. Careful analysis, clear thinking about the inventory's mission, and full integration into the overall supply chain will support robust, streamlined inventory operations.
