Sometimes it’s not the amount of inventory but where it is located that makes the difference. The allocation and assignment of inventory to multiple locations is inventory deployment. It is one of the most complex inventory strategy decisions because it opens up interdependencies with customer response times, transportation costs, and re-deployment costs and concerns. I always advise our clients that all things being equal, fewer stocking locations is better than more.
What is the likelihood of a mis-deployment if there is only one facility? Zero. Once the deployment can of worms is opened, the range of options is nearly endless running from a single, central facility to consigned inventory in every customer location. Determining where to land in that spectrum is deployment optimization.
The range of deployment scenarios is nearly infinite. We recommend a rigorous process to narrow the options to a few high potential candidate deployment scenarios for evaluation. The process includes collecting and analyzing a comprehensive data base to support the decision making, brainstorming to identify candidate deployment scenarios and scenario evaluation criteria, and rigorous analytical modeling. We have been down those roads a few times. The best way to teach deployment optimization may be to share a few examples.