How should inventory be managed according to supply chain best practices?

Managing inventory collaboratively across all partner companies is essential for optimizing supply chain performance. This approach promotes transparency and communication among all entities involved, leading to better alignment of inventory levels with actual demand. Collaborative inventory management enables the sharing of critical information, such as demand forecasts, stock levels, and production schedules.

This teamwork fosters trust and cohesion among supply chain partners, allowing for a more responsive and agile supply chain. By ensuring that all partners have access to the same data and insights, organizations can avoid issues like stockouts, overstock situations, and inefficiencies. Additionally, collaborative practices lead to improved planning and decision-making, which enhances overall customer satisfaction and service levels.

In contrast, managing inventory independently by each company can lead to siloed operations, where firms may not respond effectively to changes in demand or supply chain disruptions. Limiting inventory management to just the manufacturing department or restricting it to warehousing operations fails to take into account the broader supply chain dynamics and can result in suboptimal performance and increased costs.