Inventory management is essential when relief supplies are transiting through a storage facility. There are several reasons why inventory management is key in the supply chain. The primary reason is to help deliver supplies in a timely manner. Managing the stock contributes to coping with the uncertainty acting as a buffer between demand and supply. This includes adjusting for lead times in the supply chain, which is particularly pertinent in international procurement. In addition, a conveniently well managed inventory can contribute to economies of scale: buying large quantities can reduce the cost per item, though the ongoing storage costs must also be considered.
When keeping an inventory of for relief operations, it is highly recommended to develop a “stock policy” aligned with the organisational supply chain strategy. Stock policies guide organisations on the decision process of keeping any type of stock in any location. Applying certain logic to the stock management is the first concern for critical items in the relief operations and applicable to all type types of storage facility without regards to location or scalefacilities.
Stock policy is broadly defined by the following questions:
- Where should the inventory be located?
- What specific products should be available at each location? In , and in which quantities?
- When should inventory at a particular location be replenished?
- How much should be ordered to replace it?
The answers to these questions are dependent on two interrelated issues: the supply chain strategy and the type of stock holding.
For the purpose of this guide, "supply chain strategy" refers to the logic behind the decision of moving goods through the supply chain. There are two main applicable strategies:
In a "push strategy," the need is anticipated before a real demand exists and the supplies are “pushed” into the supply chain. The most typical examples of “push strategy” in relief operations are common in: contingency supplies as part of an emergency preparedness plan, the opening of a new program, or in the supply of seasonal items like winter kits or mosquito nets (respectively stored before winter or before the malaria season starts).
Typically push systems operate when the demand is unknown in quantity or time. Quantities are usually based on estimations and driven by assumption on the situation that can generate the demand.
In a "pull strategy," the need is formally expressed by a consumer and the supplies are “pulled” into the supply chain driven by this demand. In relief operations the “pull strategy” is typically used during short term projects, construction or rehabilitation works or when supplying expensive equipment such as vehicles or telecoms material.
The pull system operates when the demand is known in time and quantity as a project whose outputs are predefined. Quantities are - quantities are clearly defined and the regular supply chain activities trigger demand signals based on quantities informed in the trigged from the final end of itthe supply chain. Generally, the pull supply chain strategy allows agencies to manage small or individual units of inventory accurately.