The Value of Information in Inventory Replenishment
- VCARE Academy
- Nov 15, 2020
- 2 min read
Updated: Oct 6, 2022
The Technological advances and changes in supply chain management practices have combined to draw attention to the value of information sharing in inventory replenishment.
Increasing interest in the value of information (VOI) has paralleled the rise of e-commerce and the development of new information technologies which promise more timely and accurate information sharing. Three distinct uses of information, including (1) replenishment, (2) capacity allocation and stock rebalancing, and (3) coordination.
The value of lead-time information is small for low-volume items but can be significant for high-volume items. The results also show that the value of lead-time information decreases with respect to higher demand variability and lower lead-time variability. The portion of inventory held to buffer against supply uncertainty is smaller with high demand variability and high penalty cost, so the benefit of reducing it is also smaller. As for lead-time variability, when the variability is low, the inventory buffer would be low.
The dynamic use of down-stream information by upstream facilities, but not the converse. Given increased attention to collaborative planning practices in supply chain management, downstream facilities need to know how shared information can be used to improve their processes and what benefits can be expected to accrue for them. With information sharing, order-generating processes will change within the supply chain.
Although technology has made the sharing of information easier, managers should not assume that more information automatically implies better performance. The type and level of uncertainty in the existing environment, coupled with the specific use of information, will determine if information sharing really provides value.
Azhar Qadri
Supply Chain Expert | Operational Intelligence | Smart Manufacturing & Excellence | Supply Chain Optimization | Consultant and Trainer
MBA, BE, PE, CSSC, CPIA, CSCP CDDP, CSCM, CSCA
Trainer and Consultant - SMEDA
Executive Member - SCAP
A successful career in supply chain necessitates a never-ending thirst for knowledge and the most up-to-date supply chain skills and knowledge. Even though continuing education and certification programs can take time and money, they help get your specialized knowledge or skills recognized.
When professionals have training that other professionals lack, it distinguishes them and sets them apart from the crowd. Certification and master classes show that the professionals are committed to learning, excelling, and using best practices.
Featured Certification Programs
Certified Stores and Stock Controller (CSSC)
Certified Production and Inventory Analyst (CPIA)
Featured Mini-Master Classes
Supply Chain Framework and Strategy
Collaboration among Sustainability, Procurement and Supply Chain
Implementing 3PL and 4PL Strategies in the Value Chain
Supply Chain Sustainability with Circularity to Drive Profitability
Comentarios