Effective Inventory and Service Management Through Product and Process Redesign

One of the major challenges to operational managers is product proliferation. Product proliferation makes it difficult to forecast demands accurately, and consequently, leads to high inventory investment and poor customer service. Such proliferation is often a result of the global nature of the market place. Different markets may have different requirements for the product, due to differences in taste, language, geographical environment, or government regulations. Another reason for product proliferation is the expansion of the customer base. Different product versions are often developed for different market segments (e.g., education, personal, business, or government users may have different needs of a product). To gain control of inventory and service, significant benefits can be obtained by properly exploring the opportunities in the design of the product or the process by which the product is made. Logistic issues like inventory and service are thus important dimensions that design engineers should consider, in addition to measures like functionality, performance, and manufacturability. This paper describes how some simple inventory models can be used to support the logistic dimensions of product/process design. Actual examples are used for illustration.