Inventory Is a Buffer, Not a Scoreboard
Distinguish healthy buffer inventory from excess stock created by poor lead-time discipline or bullwhip reactions.
Inventory should answer a risk, not satisfy a slogan. Buffer for what? Every unit on hand should protect something: expected demand between replenishments, normal volatility in lead time, or a known service promise. If you cannot say what a buffer is protecting, you may be paying for noise. Low inventory can be expensive when lead time is fragile Cutting stock without changing replenishment speed or reliability usually transfers cost from the balance sheet to expediting, line downtime, or lost sales. The system looks leaner until reality arrives. High inventory can still feel unsafe under bullwhip conditions When forecasts are distorted,…
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