Analysis of the factors affecting the inventory level.
Excess inventory or stock-outs may result in financial or operational complications. The quality of goods gets downgraded due to excess inventory. High levels of excess stock lead to low inventory turnover, so the stocks moving are relatively small. Low inventory turnover implies operational inefficiency. Aside from this, every good product has a shelf life and starts to perish when it sits in a warehouse for a long time. Another serious consequence of stock-outs is lost revenue. Companies may incur heavy losses when potential customers place orders and items are out of stock. I investigated the reasons for unoptimized inventory level as I wanted to understand and share the factors that affect the inventory level. Lack of market understanding, product life cycle, high service level aims, poor purchasing decisions, complex/ disrupted supply chain, sales or customer issues, long lead time, improper product management, and system-related problems are some of the vital causes of this problem.
Excess Inventory/ Stock-Outs
Supply chain/ operations
This fishbone is a simple visual diagram to analyze the potential causes in a manner that is easy and gives more clarity. This Ishikawa diagram template contains all the reasons for the problem discussed above.
Curated from community experiences and public sources: