The consumer products sector, like every segment of the economy, is facing volatility on a scale and level of complexity never seen before, particularly in the area of inventory management. Economic volatility and demand variability present challenges that old models for managing the CP supply chain are not equipped to handle. Fortunately, a new breed of inventory optimization technology is helping CP companies tackle these challenges and improve supply chain efficiency.

We are living in a world of speed, immediate accessibility and instant gratification. To keep up with the demand, manufacturers have to procure raw materials, build components, assemble finished goods and physically ship them across the world. Yet they are challenged with shorter and shorter lead times, an unlimited range of finished goods SKUs, selling goods and procuring materials globally and the unending pressure to do more with less. This concept of speed when applied to material replenishment has come to be known as "Inventory Velocity". There are some principles and practices on how to improve inventory velocity in this complex environment.

Imagine a day in the not-so-distant future: A woman strolls past "dress shop #12." A GPS application on her smartphone pings the store's CRM system, alerting it of the woman's proximity to the store. The system automatically searches her purchasing history, connecting her most recent internet search for floral, pleated skirts to the last such skirt in stock now at Dress Shop #12 - in her exact size. The system then texts her a 10-percent discount on the desired item, along with the store's address. The woman sees the store, enters and purchases the item. The transaction is processed and the sale is reported to the inventory system. A replenishment order is sent to a 3PL warehouse in the Philippines, and on the next delivery, a new floral pleated skirt arrives at the store. The woman leaves with the merchandise, and before she gets home, an email is already waiting in her inbox providing a coupon for her next store visit.