When it comes to inventory management I will have to go with dell as a company to analyze. Dell’s supply-chain communications combines products from supply-chain software maker i2 Technologies, in Dallas, with systems built in-house utilizing Live Public Directory Listings
Some of the Strategies following dell:

Account selection.
Dell purposely selected customers with relatively predictable purchasing patterns and low service costs. The company developed a core competence in targeting customers, and kept a massive database for this purpose. A large portion of Dell’s business stemmed from Educational/Kids and long-term corporate relationship accounts—customers having predictable needs closely tied to their budget cycles. For these, Dell developed powerful customer-specific intranet Web sites with predetermined custom provision and budgets. The remainder of Dell’s business involved individual consumers. To obtain stable demand in this segment, Dell used higher price-points and the latest technology products to target second-time buyers who had regular upgrade purchase patterns, required little technical support, and paid by credit card.

Demand management. “
“Sell what you have” was the phrase that Dell developed for the crucial function of matching incoming demand to predetermined supply. This occurred at several levels.
At a monthly MSP/MPP (master sales plan/master production plan) appointment led by CEO Michael Dell, top-level managers agreed on a five-quarter rolling forecast with a strong focus on “the current quarter plus one.” In this meeting, Dell’s useful department leaders balanced and agreed on internal product strategies, competitive factors, and constraints. At the meeting, the sales commission plan was set to equal the production plan. Through this process, Dell harmonized the company every thirty days.
Product lifecycle management. Because Dell’s customers were largely high-end repeat buyers who rapidly adopted new technology, Dell’s marketing could focus on managing product lifecycle transitions. The company’s direct marketing provided real-time shopper feedback, which led to the rapid rounds of learning essential to product development and crisp lifecycle timing. Dell became expert at curtailing the end-of-life tail of its six-to-nine-month product cycle.

Supplier management.
Although Dell’s built-up system featured a combination of build-product-to-order and buy-component-to-plan processes, the company worked closely with its suppliers to introduce more plasticity into its system. Dell concentrated its supplier base into 50 to 100 suppliers accounting for 80 percent of its purchases. Supplier selection was based only 30 percent on cost, with the other 70 percent on quality, repair, and flexibility.

Forecasting.
Dell’s forecast correctness was about 70 to 75 percent, due to its careful account selection. Demand management, in turn, closed the forecast gap. When in doubt, Dell managers over-forecast on high-end products because it was easier to sell up, and high-end products had a longer shelf life.
Liquidity management. Direct sales were explicitly targeted at high-end customers who paid with a credit card. These sales had a four-day cash conversion cycle, while Dell took forty-five days to pay its vendors. This generated a huge amount of liquidity that helped finance Dell’s rapid growth and limited its external financing needs. This cash engine was a key underlying reason that enabled Dell to earn such extraordinarily high returns.

Profitability, not inventory
The inventory in a channel is dogged by the variance in supply and the variance in demand. Unless these variances are reduced, channel inventory can only be moved around, not eliminated.
Through its use of profitability management, Dell matched supply and demand on a daily, weekly, and monthly basis. It sharply reduced the variance, and the need for inventories simply disappeared.
In many companies, inventory substitutes for productivity management, tying up valuable capital and preventing the company from focusing on day-to-day business alignment. In most companies, managers face a amount between managing inventory and managing away the need for it. Not having much time for a Spray Tanning

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Kyle Tyndall is the owner and operator of this Tech Blog. He writes and host other writers articles about technology here. He is a computer technician for the school district he lives in and has worked in technology since 2001.  Thanks for stopping by.

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