Most companies develop plans and goals each year to improve inventory performance – their inventory turns, reduce their inventory by x dollars, reduce lost sales by x percent… but they have difficulty each year actually achieving this.
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Historically, one of the biggest challenges facing wholesale / retail companies looking to invest in a system to improve their inventory has been getting a solid return on their investment. And let’s face it, no one in their right mind wants to invest the money and time (and go through the disruption a new system creates) if they are not confident that the return will be well worth the effort.
All inventory decisions for wholesalers and retailers begin with some estimation of future sales (ie. forecast). Improving the accuracy of that forecast has a direct and significant impact on inventory profitability. Inaccurate forecasts have a heavy cost in lost sales, excessive stock, and bad decisions based on faulty estimates of future demand.
Now that we have gone in depth about the first three disciplines of inventory performance- Alignment, Precision, and Proactivity- we are going to talk about the final discipline - Measurement.
Now that you have read an overview of Thrive's four disciplines for optimal inventory performance, and have hopefully read our in depth articles about Alignment and Precision, we would like to go over the third of the four disciplines- Proactivity.