Reducing Inventory risk

The challenge

A consumer products distributor was carrying inventory in the wrong places. Some lines sat for months while others ran out during promotions, and each shortage prompted a blanket increase in stock that made the overall position heavier without making it more reliable.

The approach

Rather than setting a single policy for the whole range, the planning team classified items by demand pattern, margin and the consequence of a stock-out for the customer. Fast, stable lines were managed tightly against forecast; erratic but critical lines were given deliberate buffers; slow, low-impact lines were moved towards make-to-order or longer replenishment cycles.

Commercial colleagues were brought into the planning cycle so that promotions and range changes reached the planners early enough to act on, instead of arriving as surprises in the weekly numbers.

What changed

Stock began to sit where it protected service rather than where it had historically accumulated. Emergency expediting became less frequent, obsolete stock was identified earlier, and conversations between sales and planning shifted from blame after a shortage to trade-offs agreed in advance.

Lessons for practitioners

Lean and resilient are not opposites when inventory is segmented: the same range can hold less stock overall and still protect the lines that matter most. The harder part is organisational, since a segmentation only holds if commercial teams accept that not every item deserves the same service level.