The Bee Hive

The crux of managing inventory effectively is to ensure that our distributor will be able to at least meet or exceed his customers' expectations in order to maximize his profits. Customers' expectations differ - some will demand immediate delivery of an ordered item but some are prepared to wait longer. But what is relevant is to examine if customers are always this demanding. Surely there must be some items demanded that can be delivered in a certain time without negatively jeopardizing the customer service levels?

As more companies turn to 3PLs for assistance, they're gaining confidence in these providers' ability to deliver more than just day-to-day tactical solutions. Many companies have "great expectations" for 3PL providers, expecting solutions that may be "undeliverable". I can think of four key issues even the best 3PL shouldn't be expected to solve.

Most distributors spend a lot of time developing sales projections and budgets for expenses. Each month these forecasts are compared to actual sales and expenses. If sales are lower, or expenses higher than what was projected, management will usually take corrective action to ensure that the company remains profitable.

Budgets are good management tools. Unfortunately, few distributors maintain budgets and projections for what is probably their largest asset, inventory. It is critical to the success of your inventory management system, and your business in general, to develop a budget for the value of stocked inventory maintained in each warehouse. This budget is referred to as the "target inventory investment."

Many employees don't realize the value of your stock inventory and may "borrow" products or take samples for their personal use. Unfortunately, there is another reason why material disappears: theft. Many distributors find it hard to believe that their employees or customers would steal. But unfortunately stealing, especially petty theft, is a very common reason for "inventory shrinkage." And a distributor who doesn't admit that theft is a problem, or a potential problem, is just burying his or her head in the sand.

Lead Logistics Management - Extending The Boundaries

Evolution Of The Logistics Provider Model

In the late 80s and the early 90s, with the evolution of electronic commerce clients began to realize the importance of outsourcing their basic transportation needs to specific providers. This allowed the client to control costs, reduce staffing, and try to begin realizing logistics improvements by using specialized providers.