INVENTORY REDUCTION THROUGH LOGISTICS POSTPONEMENT

Abstract

This study was aimed at discovering an appropriate strategy to minimize inventory days and cost in a fast moving consumer goods company. In 2011, an analysis that inventory days at the Japan-market distribution center were off target. The research proved that push replenishment based on full speculation strategy is the root cause of the inventory problem. Logistics postponement was selected as a solution, resulting in inventory storage relocation and replenishment. By restructuring the supply chain, the central warehouse in Thailand is utilized as the inventory storage location, and replenishment is based on aligned inventory days. Inventory days reduced, with substantial cost saving Logistics costs for the new supply chain structure have no negative impact on the total supply chain cost.