Who Kills "Logistics"? - ⑭ The Logistics Department Alone Cannot Maintain Optimal Inventory

Well, it's Monday.
Monday is the day I write about logistics, my area of expertise.
Last week, I wrote an article on the theme of "Maintaining optimal inventory is the goal of warehouse management".

Today, I would like to write about how "the logistics department alone cannot maintain optimal inventory."

The Paradox of Optimal Inventory

In last week's article, I wrote that proper inventory management must be carried out as a key point of logistics. In proper inventory management, it must be possible to provide what is needed, when it is needed, which means one must strive to maintain a state where inventory is neither excessive nor insufficient, and avoid incurring unnecessary inventory costs.

…When it comes to that,
that optimal inventory level is impossible without "accurate forecasting." From the perspective of a manufacturer's logistics representative, if you don't know how much of your own products will sell, or from the perspective of a logistics company, if you don't know how much of a client's products will sell, you cannot know the optimal inventory level.

Also, a reference value is needed to judge whether the state is "neither excessive nor insufficient." And whether that judgment was correct can only be known in hindsight.

Adjustment Skills Required of Logistics Personnel

What is required of logistics personnel is the ability to "adjust." It is similar to someone aiming to be an ace pitcher, throwing a ball at a target on a wall over and over again, making micro-adjustments to their arm swing and footwork little by little.

The "target" is the sales goal.
If you don't know what products to sell, when, and how much, you cannot provide what is needed at the necessary time. It is not enough to simply have enough inventory to cover orders; the resources (workers, trucks, etc.) required to move the products to where they are needed must be prepared, and the costs involved must also be optimized.

The Importance of Collaboration with the Sales Department

For that, collaboration with the sales department becomes important.
The only thing the logistics department can do is make micro-adjustments based on past data. If the "target" itself shifts, the micro-adjustments become meaningless. That said, it is also unreasonable to say "don't miss the forecast." The sales department is working hard to achieve sales goals, but they cannot always achieve them. Also, sometimes the sales side might launch a campaign (for example, sales promotion for a specific product). Such irregular movements also have a major impact on the logistics department.

The sales department has its own difficulties, such as sales goals being too high, having to respond to sudden customer requests, or having to carry out irregular sales promotions. They have their own worries. Even so, the department downstream is the one that receives the impact (the so-called bullwhip effect) from this.

First, it is necessary to create an environment where information can be shared smoothly with the sales department, and it will be important to define with management how much of a buffer is appropriate when performing logistics "adjustments."

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Thank you for reading to the end.

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