How can a multi-echelon inventory optimization improve supply chain efficiency?

Multi-echelon inventory optimization is a sophisticated technique employed to manage inventory levels across multiple stages of the supply chain. By considering the interdependencies of inventory decisions across echelons (e.g., suppliers, manufacturing sites, distribution centers, and retail outlets), a company can better balance inventory levels, minimizing costs and improving service levels.

For instance, a company may reduce safety stock at a retail outlet by improving the reliability and speed of replenishment from a regional distribution center. Consequently, overall inventory levels decrease while maintaining or even improving product availability for the end customer.

For additional information, you might want to explore The Institute for Operations Research and the Management Sciences (INFORMS) which offers resources on advanced inventory management practices.