How Does Your Inventory Management Strategy Measure Up?

  • by Rajesh Ray, Senior Managing Consultant and SCM Product Lead, IBM Global Business Services
  • March 15, 2008
Discover where your organization is in this inventory maturity model, understand the set of required capabilities, and identify the key SAP functionalities to implement at each level. Consider the guidelines described in this roadmap to achieve higher customer satisfaction levels and reduce inventory carrying costs.
Key Concept
The inventory maturity model is a proposed four- level blueprint for SCM organizations that want to improve their inventory management strategies and implement best practices each step of the way. The author of the maturity model recommends new options and functionality as your strategy progresses through each level.

How effective is your inventory management strategy? Perhaps your company is growing exponentially or maybe you recently upgraded your SAP system. In my experience, I’ve identified several critical decision points that affect how you should handle your inventory to meet your specific business needs.

Based on my observations, I developed a four-level inventory maturity model. You can use it as a framework to assess technical and functional prerequisites, identify where your organization currently resides, understand the standard SAP tools and processes you’ll need to succeed at each level, and design an inventory roadmap for your future.

Looking at these capabilities, it is obvious that without level 1 capability, it is difficult to remain in business. Most companies fall in level 2. Maturing to levels 3 and 4 requires a lot of effort. However, at these levels the company’s inventory management capability is a strategic differentiator and no longer just another supply chain process.

Rajesh Ray

Rajesh Ray currently leads the SAP SCM product area at IBM Global Business Services. He has worked with SAP SE and SAP India prior to joining IBM. He is the author of two books on ERP and retail supply chain published by McGraw-Hill, and has contributed more than 52 articles in 16 international journals. Rajesh is a frequent speaker at different SCM forums and is an honorary member of the CII Logistics Council, APICS India chapter and the SCOR Society. 

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