Inventories and origin of the concept prompted investigation and search to obtain a more in-depth look at what has transpired over time and what the future might require. The results indicated inventories that have existed for centuries ― “just to have enough on hand” ― as having been historically recorded. In today’s business environment, creating and maintaining inventories is a major priority for executing an efficient supply chain.
To emphasize the important role inventory plays in the supply chain cycle, further studies were conducted to determine whether some criteria exists for creation and what major factors are involved and used in making responsible decisions.
Although common inventory problems exist among all industries, focus here will relate to procedures, methods, formula and other means experienced in beverages. As searches indicated, producers and distributors for many years resorted to “back of the envelope” method of calculating not only what should be produced, but how much inventory must be available.
Such practices transitioned to more formal production planning and scheduling but did not solve the inventory decision. During the past 50 years, continual SKU explosions resulted in more products and packages to be inventoried. Numerous sources have made many attempts to develop a universal mathematical formula that could be applied to a wide range of industrial inventory obstacles.
From an operations perspective, in addition to producers and distributors using some homemade approach, it became apparent that more sophisticated means were necessary to solve difficult inventory situations.
As the high-tech environment developed with computers and software programs, the need for new approaches surfaced with a myriad of companies being formed that focused on inventory controls including creation, application and maintenance. Content analyses of several programs have provided a realistic insight into the appropriateness of their application to the beverage arena operating conditions. Although similar conditions in other industries exist in beverages, the large number of variables are constantly changing in complexity and magnitude demanding a totally different inventory mindset.
Review of existing inventory approaches has concluded that even though some might be partially applicable to beverages, the producer/distributor group ― because of a unique set of conditions ― must be innovative in whatever is developed to provide a realistic, practical and conditionally oriented inventory program.
Because inventory, at all levels, is key to supply chain success, any plan, program, or system for beverages should consider in real time factors and variables that require realistic conditional innovations for successful application:
Factor 1 – Location of inventory to be maintained; Variables – Type of account, volume, space, cost
Factor 2 – Timing for inventory required; Variables – Peak, low, seasonal, promotion
Factor 3 – Necessity for inventory required; Variables – Avoid out of stocks, competition
Factor 4 – Responsibility for plan; Variables – Fulfillment, supply chain managers
Factor 5 – Products that are involved; Variables – Promotions, specials
The innovation premises here are these factors/variables must be considered at each location in the supply chain. Physical layout of location and frequency of change will always prevail. The number of SKUs, type of account are critical.
Innovation becomes essential to cope with unique beverage operating conditions.
