Blind men & the elephant

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Blind men & the elephant

By ashwini

December 5, 2023

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High inventory problem is almost universal. Like the blind folded men feeling the elephant described it differently, the factors causing high inventory vary in nature.

In a recent case, it was the unmindful issue of purchase orders (PO) that caused quite a bit of pile of inventory. This is a respected clothing brand and the Purchase team would issue garment orders to each vendor combining many clothing items together, across different fabrics, colourways, styles and even different product categories on the same PO.

Needless to say, the operation resulted in the vendor getting a single PO with dozens of items on it, without any indication on (a) priority – that is which design is required to come first and which later in what order and (b) ensemble- that is which two or three items (salwar-kurta-dupatta) are required together

Such a nature of PO resulted in random order receiving of all the items at the warehouse after production. At the warehouse level, they had to check with the Design team to know if the received item could be despatched on its own to the stores or had to wait for its ensemble design to go with it. And in many cases, the despatch would wait till the ensemble item was received- in some cases over two to three weeks.

The money that had been locked into the inventory right from fabric stage to the final item simply sat in the warehouse without finding its way to the retail shelf on account of the way the PO was issued.

The simplest solution to this problem was- (a) Issue a single PO of ensemble items and communicate with the vendor that the bill will not be settled without full delivery of the concerned PO. (b) Indicate priority of items across different POs through expected delivery date. The latter of course calls for a thorough understanding of vendor’s capacity accorded to the brand and current load the vendor is already carrying – to be able to predict accurately a delivery date. (Accurately predicting a delivery date is a Science in itself!)

Simple changes on the PO issue – no rocket science- brought about a positive change in the inventory productivity and reduced its high level at the warehouse.