Inventory cost reduction
Reducing inventory and related total inventory costs do not always go hand-in-hand. So how can fleets further trim inventory costs without the risk of running out of necessary materials? Perhaps the most basic element is to work with your supplier(s) to shorten cycle order fulfillment times to minimize the need for excess safety stock.
Another avenue to achieve cost savings is through product consolidations. Multiple individual safety stocks can be combined into one typically smaller safety stock. Consumption rates for consolidated products are higher, making smaller order quantities more economical. The higher consumption rates are also typically more easily rated, which can translate into further safety stock reductions with no increased risk of running out.
For any fleet, an efficient inventory management strategy can drive cost savings and productivity enhancements. By paying close attention to the factors mentioned above, you can build and sustain an efficient system for your operation.
Ken Cicora is fleet marketing manager with ExxonMobil Lubricants & Specialities.