How do you manage inventory for products with long lead times?

I completely agree that forecasting is a crucial starting point when it comes to managing inventory. It's important to consider the lead time when forecasting, as a longer lead time makes us more vulnerable to changes in market conditions and other environmental factors. This vulnerability can be mitigated by maintaining a higher level of safety stock. The size of the acceptable safety stock will depend on the type of product and how sensitive it is to our operations.

Forecasting demand is a core feature of any strong MRP (Materials Resource Planning), software. A strong tool will enable you to improve your purchasing, more accurately manage your inventory, and improve your relationships with your customers and suppliers. I would argue that selecting your forecasting method or tool is perhaps one of the most critical first steps. The right tool will consider historical data that multiple stakeholders in the business have visibility into, and are in agreement with. The tool will also be able to identify your unique constraints and resources for planning. There are plenty of best in class solutions in the market to support your needs - the trick will be finding the one that best suits your business.

The first step in managing long lead items is to identify them early in the project. During the initial project planning phase, review the project requirements and identify items that have longer lead times, such as specialized equipment, custom-made materials, or items with longer delivery timelines.

Managing the stock of products with long delivery times in the manufacturing industry and logistics management can be challenging, but there are some strategies that can help minimize impacts. Here are some recommendations: 1 Demand Forecasting 2 Safety Stock 3 Effective Communication with Suppliers 4 Diversification of Suppliers 5 Negotiation of Contractual Terms 6 Strategic Stock Near the Customer 7 Use of Technology 8 Continuous Monitoring 9 Flexible Return Policy 10 Team Training

While lean and just-in-time (JIT) inventory systems can enhance efficiency and please finance and top management, it's crucial to consider potential drawbacks. Over-reliance on these strategies, especially during disruptive events like COVID-19, can lead to supply chain vulnerabilities, difficulties in meeting demand variability, and challenges in adapting to unforeseen changes. Introducing a small buffer or safety stock can provide flexibility and help mitigate risks, striking a balance between cost efficiency and resilience in inventory management. Regular monitoring, continuous improvement, and proactive risk management are essential for the successful implementation of these strategies.