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Task 8 Warehouse & Inventory - Answer

The memo discusses moving from a "push" inventory policy, where inventory is pushed into the supply chain, to a "pull" policy, where inventory is supplied to meet known demand. To implement this change, SCILaid needs short-term demand forecasts from field operations and information on current inventory levels. Regular communication with program staff will enable gathering data on demand and the impact of the recent hurricane on future inventory needs. Maintaining safety stock is important to mitigate risks from uncertain demand or delays in replenishment and should still be budgeted for despite the program officer's decision.

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188 views2 pages

Task 8 Warehouse & Inventory - Answer

The memo discusses moving from a "push" inventory policy, where inventory is pushed into the supply chain, to a "pull" policy, where inventory is supplied to meet known demand. To implement this change, SCILaid needs short-term demand forecasts from field operations and information on current inventory levels. Regular communication with program staff will enable gathering data on demand and the impact of the recent hurricane on future inventory needs. Maintaining safety stock is important to mitigate risks from uncertain demand or delays in replenishment and should still be budgeted for despite the program officer's decision.

Uploaded by

Вадим Косяк
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Memo

To: Olga Kosyak


From: Francois Damba
Date: 15 December 2022
RE: TASK 8 – WAREHOUSE & INVENTORY

The operation in Betaland has so far involved ‘pushing’ inventory into the supply chain.

SCILaid want to move from a ‘push’ to a ‘pull’ inventory policy. This means supplying to
meet a known demand and will enable them to better manage inventory.

What information do we need to capture on the current operation that will enable us to move
to a pull inventory policy, and where can we obtain this information?

The hurricane is likely to have an impact on the future levels of demand. What information
will you need to gather to enable you to ‘forecast’ the effect of the hurricane on your
inventory holding?

The programme officer has decided against budgeting for safety stock for the coming year.
Can you present your argument that this may not be the best course of action?

Regards

Francois

To answer this task, you will find the following the learning material sections helpful

Managing Inventory Levels

Dear Francois

Taking into account that humanitarian situation in Betaland is stabilizing and humanitarian operation is
on-going, SCILaid has an opportunity and necessity to move from ‘pushing’ inventory policy which is
usually used only at the beginning of a humanitarian operation when the need is great but
uncertain to ‘pulling’ inventory policy.
1
Certainly, at the start of operation we had to use the initial assessment reports for planning
deliveries or we delivered the supplies that we had available whichever was the smaller.
Therefore we were ‘pushing’ the inventory from the headquarters to the field.

Now when the operation is ongoing, we need to move to pulling inventory policy, when the
requested goods are ‘pulled’ from the field, which is more cost effective and can more efficiently
satisfy real demand. With such type of inventory the supply and demand are in a much better
balance and the inventory management can be greatly improved.

In order to move to ‘pull’ inventory policy we need to have regular short term forecasts of demand
from the field. In order to get them we need to establish good communication with our
programme colleagues that can provide us with such information. We can also use our

Short term forecasts are forecasts made of demand resulting from an ongoing operation. Short term
forecasts are used to make decisions on the replenishment of cycle stock and safety stock.
When the program is up and running, it is necessary to have regular supplies. The demand is
received from the field (Inventory manager/ Program manager) according to consumption and new
needs.
Examples of this are:
Hospital: When an organisation is running a hospital, the organisation is in charge of the
pharmacy of the hospital. Replenishment is done according to consumption and lead time.
Reordering is sent from the field operation (Inventory manager/program).
Refugees or IDPs need to receive hygiene parcels. The reordering is done by the field
operation according to the number of people (which can change), the distribution cycle and
the lead time.

The purpose of safety stock is to manage the risk of stock-outs in the period between deliveries
from
suppliers.
Stock-outs can occur for two reasons :
The actual demand level is higher than the expected level (the forecast).
The supplier lead time to supply new stock is longer than expected.
The purpose of safety stock is to protect us from either or both of these things happening in order
to
manage the risk of stock-outs.
Therefore, the amount of safety stock required depends on three factors :
The unpredictability of demand.
The reliability of suppliers.
The level of risk of stock-outs that the organisation is willing to take.
The simplest way of defining the amount of safety stock is by weeks or months of normal demand
e.g. 2 weeks stock or 3 months stock

 Page 2

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