nm := 7 8 Articles Agree & Join Linkedin 8y clicking Continue to join or sign in, LinkedIn’s User Agreement, Privacy P All / Inventory Planning Policy. What are the best prac in a multi-echelon sup /ou agree to and Cookie G Sign in to LinkedIn with Google x Rajesh M [email protected] owered by Al and the Linkedin community | Understand the trade-offs Be the fst to add your personal experience To create your account, Google will share your name, email address and profile picture with 2. Identify the sources of uncertainty Linkedin. See LinkedIn's privacy policy and Terms of Service. Be the fist to add your personal experience 3 > Choose the appropriate level of pooling Be the first to adk your personal experience 4 |mplement the suitable pooling mechanism Be the fist to ad your personal experience 5 Monitor and adjust the pooling performance Be the fist to your personal experience 6 Here's what else to consider Be the fist to your personal experience Risk pooling is a strategy to reduce the uncertainty and variability of demand and supply ina supply chain by aggregating inventory or capacity across different locations, products, or time periods. By pooling resources, a supply chain can achieve higher service levels with lower inventory costs and less waste. However, risk pooling is not a one-size-fits-all solution. It depends on the characteristics of the supply chain, such as the number of echelons, the demand patterns, the lead times, and the cost structures. In this article, you will learn what are the best practices for risk pooling in a multi- echelon supply chain, where there are multiple stages of distribution, production, or storage between the supplier and the customer.A aeticla Find expert answers in this co!!-h-~~~ Experts who add quality contributions will have a che Agree & Join Linkedin By clicking Continue to join or sign in, you agree to Linkedin's User Agreement, Privacy Policy, and Cookie Earn a Community Top Voice be Pl s Add to collaborative articles to get re Start a contribution €eo See what others are saying 1 Understand the trade-offs Risk pooling can reduce the total inventory in the supply chain by exploiting the law of large numbers, which states that the average of a large number of independent random variables is more stable than any individual variable. However, isk pooling also involves some trade-offs, such as increased transportation costs, longer delivery times, lower responsiveness, and higher coordination complexity. Therefore, you need to understand the trade-offs and balance the benefits and costs of risk pooling for each echelon and the whole supply chain ‘Add your perspective 2 Identify the sources of uncertainty The main sources of uncertainty in a supply chain are demand variability, supply variability, and lead time variability, Demand variability refers to the fluctuations in customer orders, which can be affected by factors such as seasonality, promotions, trends, and preferences. Supply variability refers to the disruptions or delays in the supply of raw materials, components, or finished goods, which can be caused by factors such as quality issues, capacity constraints, natural disasters, or strikes Lead time variability refers to the variation in the time it takes to move inventory from one echelon to another, which can be influenced by factors such as transportation modes, congestion, weather, or customs. You need to identify the sources of uncertainty for each echelon and the whole supply chain, and quantify their impact on inventory levels and service performance.‘Add your perspective Agree & Join LinkedIn By clicking Continue to join or sign in, you agree to Linkedin’ User Agreement, Privacy Policy, and Cookie 3 Choose the appropriate lev: Poiicy. The level of pooling refers to the degree of ag_ - . dimensions, such as locations, products, or time periods. The higher the level of pooling, the more resources are shared and the lower the inventory required. However, the higher the level of pooling, the more difficult itis to meet the specific needs of different customers or markets. Therefore, you need to choose the appropriate level of pooling based on the demand correlation, the product variety, and the customer segmentation. For example, if the demand for different products or locations is highly correlated, then it makes sense to pool inventory at a higher level, such as a central warehouse or a regional distribution center. If the demand for different products or locations is lowly correlated, then it makes sense to pool inventory at a lower level, such as a local warehouse or a customer site. ‘Add your perspective 4 Implement the suitable pooling mechanism The pooling mechanism refers to the way of managing and allocating inventory or capacity across different echelons in the supply chain. There are different pooling mechanisms, such as centralized control, decentralized control, or hybrid control. Centralized control means that one entity, such as @ headquarters or a third-party logistics provider, decides how much inventory to hold and where to ship it in the supply chain. Decentralized control means that each echelon, such as a factory or a retailer, decides how much inventory to hold and where to order it from in the supply chain. Hybrid control means that some decisions are made centrally and some are made locally in the supply chain. You need to implement the suitable pooling mechanism based on the information availability, the decision authority, and the incentive alignment. For example, if the information is transparent and accurate across the supply chain, then centralized control can achieve higher efficiency and coordination. If the information is incomplete or distorted across the supply chain, then decentralized control can achieve higher flexibility and autonomy. ‘Add your perspective. . Agree & Join LinkedIn 5 Monitor and adjust the poc sy clicking Continue to join or sign in, you agree to Linkedin’s User Agreement, Privacy Policy, and Cookie Risk pooling is not a static strategy. Itneeds te policy 2s in the supply chain environment, such as dem structures. You need to monitor and adjust th - . 2 indicators (KPIs), such as inventory turnover, fil rate, backorder rate, or total cost. You also need to consider the feedback effects and the dynamic interactions between different echelons in the supply chain, such as the bullwhip effect, the inventory inaccuracy, or the order batching. You can use tools such as simulation, optimization, or analytics to evaluate and improve the pooling performance. ‘Add your perspective 6 Here's what else to consider This is a space to share examples, stories, or insights that don't fit into any of the previous sections. BS Like Share Os ‘Add your perspective is Corsten) a™ Inventory Planning + Follow Flonning Rate this article We created this article with the help of Al. What do you think of it? Its great) (_ Its not so great Report this article More articles on Inventory PlanningHow do you choose the best ABC criteria for your inventory? 14 contributions More relevant reading E-commerce What are the benefits and challenges How do you meast of bus Agree & Join Linkedin B 2c 8y clicking Continue to join or sign in, you agree to Linkedin’s User Agreement, Privacy Policy, and Cookie Policy. What are the best ways to manage supply chain risk in your warehouse? 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