January 15, 2019
Managing inventory-related risks in international shipments
By: Pierre A. David

A little prevention goes a long way

After five years as the international logistics manager at SmappMart, a retailer that sells small home appliances, you have acquired a reputation for careful planning. The company has doubled the number of stores it had 15 years ago and just opened a second distribution center (DC) to improve service to the southern half of the country.

The new DC is like the existing one, receiving goods from SmappMart’s overseas suppliers by the containerload and making deliveries to SmappMart stores twice a week. However, you realize this expansion will come with a set of new issues.

You hire Rita to manage this new DC and meet with her to determine the proper procedures and policies to implement to ensure the company can deliver the service level to which store managers have become accustomed. You also decide to revisit all the current inventory-holding procedures, such as how much safety stock the DCs carry to accommodate store orders.

There are several questions you should address before you start making changes in your company’s shipping policies, such as:

  • What are your company’s stockout costs?

  • What service level should the company provide to its stores?

  • How much safety stock should the company carry to maintain the chosen service level?

  • What preventive measures can reduce the probability of losses due to inventory-related risks?

  • What additional policies and procedures should you consider given the large shipments your company receives from overseas suppliers?

As the international logistics manager, you know it’s your responsibility to find answers to these questions so that your company can seamlessly integrate the new DC into its supply chain.

Which policies will reduce your inventory-related risk the most? What service level should you maintain, and how will that affect both costs and customer relationships? The Accenture Academy courses Inventory-Related Risks in International Shipments, Preventing Inventory-Related Risks in International Shipments, Assessing Inventory-Related Losses in International Shipments, and Managing Inventory to Minimize Inventory-Related Losses in International Shipments will help you identify and mitigate inventory-related risks in your international shipments.

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