Zero Inventory Project
“Just-in-time inventory approach ”
THE FUTURE OF THE SUPPLY CHAIN
Zero inventory is a business strategy where companies aspire to hold little or no on-hand inventory stock. The aim of zero inventory is to order the exact quantity that will be sold, and receipt goods into stock when they are needed.
​
Based on the just-in-time inventory approach of short lead times, zero inventory is more effective, flexible and less expensive than holding and storing large amounts of inventory. Stock is effectively pushed back up the supply chain by the retailer who wants to avoid the risks and cost of holding inventory.
​
The zero-inventory approach is not feasible for all enterprises but is perfectly suited to many businesses in today’s technological environment. Most internet-based retailers operate using the zero-inventory model, particularly for high variety, perishable and fashion-based consumer lines. Allowing companies to maximise cashflow by raising the speed and rate of inventory turns.
​
Ultimately, a zero-inventory strategy relies on having an efficient supply chain that is completely reliable.
​
Zero inventory reality
It is unlikely that most businesses will truly achieve zero inventory because many will continue to hold some buffer stock for emergencies, late delivery, natural disasters or any risk that threatens customer service. They know that having the right product, in the right place at the right time is the simplest way to increase customer service level satisfaction.
​
However, the closer a business can get to achieving zero inventory, the greater the cost savings and benefits such as improved cash flow, reduced carrying costs and inventory waste from maintaining large, unnecessary levels of inventory stock.
Project Success
"2 Successful projects using the just in time inventory and counting...."
Project 1
After 2 years of working together with our client, we've successfully integrated the Just in time inventory program with 1 of their core products, their cotton tee shirts, short and long sleeves runs year round in their retail stores. During the past they would follow their traditional fashion calendar and prepare their stock prior to the start of their season. And when retails sales do not reach their expectations they would build up aged inventory season after season, and to the point where all their earnings would be invested into these depreciated aged inventories.
​
To help with this problem, we've managed to work with this specific client for a just in time inventory program just for their needs. Samples would have to be design, develop and approved prior to the start of their season, then buyer will need to commit and provide their sales forecast for factory to reserve fabric and production capacity. Once everything is set up buyer would still need to stock just enough inventory for each stores but that number can be controlled to the lowest possible, and if any store's inventory is running low, buyer will be able to top up their inventory within 2-3 days. And at the end of the season, with the same sales value, buyer was actually able to lessen their leftover inventory by 30%. In short buyer is able to storage fabrics which can be reuse for next season instead of leftover with aged inventory.
​
​
​
​
​