Description
Scenario
Company X has been experiencing significant challenges in balancing its inventory levels. On one hand, some high-demand products frequently go out of stock, causing delays in order fulfilment and customer dissatisfaction. On the other hand, low-demand items are overstocked, leading to high carrying costs and wasted warehouse space. Additionally, supplier lead times are variable, and logistics costs have been rising steadily due to increasing transportation costs and inefficiencies in the warehouse.
The company’s leadership has set a target to reduce overall inventory costs by 15% within the next six months while improving product availability for high-demand items.
Task:
You have been hired as the Senior Supply Chain Manager to address these challenges. Please outline your approach to achieving these objectives. Consider the following questions:
Questions:
- Inventory Optimization
How would you adjust inventory management strategies to reduce overstocking and ensure availability for high-demand items? What specific methodologies (e.g., ABC analysis, safety stock calculations, reorder point adjustments) would you implement, and how would you prioritize items?
- Supplier & Logistics Management
Given the variability in supplier lead times, what strategies would you use to stabilize and improve supplier reliability? How would you manage logistics costs while ensuring timely delivery, particularly for high-demand products?
- Warehouse Efficiency and Cost Reduction
Describe any changes you would make to the warehouse layout or processes to improve efficiency and reduce handling costs. What technologies or process improvements (e.g., automation, Lean methods) would you consider implementing, and how would you measure their effectiveness?
- Data Analysis & KPIs
What KPIs would you establish to monitor the performance of your new inventory, supplier, and warehouse strategies? How would you use data to make adjustments if performance metrics indicate issues?
Deliverables:
The candidate should present a plan that includes:
