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Distribution solution

How to maximise availability while minimising inventory:

1. The problem in distribution is unpredictability of demand.
2. The intuitive solution is to carry inventory everywhere – particularly at or close to retail in order to minimise stock-outs.
3. The consequences are very high total inventory, regular stock-outs, cross shipments and a limited product range, because of working capital and shelf-space restrictions.
4. The counter-intuitive solution is to hold inventory centrally, near to production, where predictability is highest, and to replenish consumption at retail on a very fast cycle, providing discounts on consumption volumes rather than order volumes.
5. The prosequences (inevitable good results) are a wider range of stock, allowing a greater cross-sell, far higher availability, lower total inventory and far lower cross-shipment costs.

We’ve developed a few insights on how this solution could be adapted for New Zealand’s remoteness and recession condition challenges.