A supply chain is a comprehensive system which tests how efficient an organization is together with its partners. Supply chains that are filled with high costs, inefficient processes, uncoordinated suppliers and rushed fulfillments can significantly drag down business profitability and expose the supply chain executives to excessive risk.

This is where the Inventory on Demand (IOD) companies can come in. Organizations that partner with the third-party IODs defer their inventory ownership and acquire complete control on their supply chain operations. Although IOD services include full optimizations of the supply chain infrastructure, utilizing them isn’t necessary to achieve modest improvements to your efficiency.

Since any business size can optimize their supply chain for the better, following the few best practices mentioned below can lead to better inventory management support.

1. Manage Buffered Inventory for Supply Chains

The inventory of a business is the heart of its supply chain. By comparing all costs in operations, the value that inventory optimization gives to the supply chain is unmatched.

All supply chain coordinators know that accurate forecasting of consumer demand is important to a lean supply chain. That is why having sufficient inventory is important for on-time deliveries and consistent performance levels. However, too much inventory ownership can lead to high carrying and storage costs. Not being able to meet the demands of consumers would usually mean having to rely on expedited shipping, which is an inefficient and expensive fallback.

The biggest way a business can improve their supply chain is to minimize their reliance on buffered inventory.

2. Organize Your Suppliers

Logistics providers understand very well the paradox in the modern supply chain: Wherein the conflicting goals of outsourcing and lean business practices result in a supply chain that is torn between two competing concepts. With outsourcing, you are relying on entrusting distribution and transportation to partners. There is, however, no overarching system of accountability that ensures suppliers are synchronized and efficient.

Optimized supply chains need all partners in the system to coordinate and organize with each other. The best practices for shipping quality and efficiency needs to be applied. This can be difficult to achieve if there is no single point of contact that is managing inventory through the supply chain.

3. Regionalize Your Distribution

Among the value sources which drives inventory services is regionalized distribution. A lot of supply chains do not have distribution hubs located close to the point of consumption. They would instead rely on centralized locations with regards to order fulfillment. Such inefficiency results in many unnecessary steps in transportation which could be streamlined with a regionalized distribution.

Most local distribution hubs support higher product availability for their customers, help businesses achieve better service and reduce transportation expenses that are unnecessary across the board. The costs for these additional facilities can be a hindrance to implementation. But with the help of inventory solutions, these issues with be solved by making third party providers bear the responsibility for efficiently matching the needs with supply.