Have you got insufficient or sufficient stock on hand? Would you be able to know how much to produce, when to produce, and the total cost of your logistics chain? How important a role does seasonal fluctuation play in storage costs?
Holding an excessive amount of stock ties up too much capital and generates high storage costs. And that is all about money you should have for your business operations.
There is no correlation between an excessive amount of stock and customer-expected service level. Actually, enough is enough even when talking about stock size.
But how much is enough?
We have successfully modeled data processes for our customers to steer their production level, stock level, and logistics costs. In the very best case, capital tied up in stock decreased more than 30 percent. And the service level remained stable.