The Logistics Institute at Georgia Tech has released the results of an inventory management focus group

on “factors that influence inventory turns and fill rate in warehousing, transportation and procurement.”
Dr. Ed Frazelle, director of institute's Logistics Management Series, chaired the inventory management focus group, which listed these top factors:
Warehouse Factors
1. Inventory accuracy. Lack of trust breeds just-in-case inventory.
2. Number of SKU (Stock Keeping Unit – or single item represented by an inventory number). More SKUS means more safety stock and less attention to problem SKUs.
3. Number of warehouse locations. The amount of inventory in a logistics network is proportional to the square root of the number of stocking locations (warehouses). Fewer warehouse locations mean lower inventories, primarily safety stock.
Transportation Factors
1. Mode choice. Slower modes yield excess in-transit inventory. Less reliable modes yield higher safety stocks.
2. Delivery/pick-up frequency. More frequent shipments reduces cycle stock inventory.
3. Routing. Favorable routes and schedules reduce in-transit stocks.
Procurement Factors
1. Lead time. Longer lead times mean lower forecast accuracy and excess in-transit inventory.
2. Quantity/order amount. Half the purchase order quantity stays in the system. The lower the purchase order quantity, the less inventory in the system.
3. Purchase price. Quantity discounts are special opportunities to procure but yield higher inventory levels.
The Logistics Institute was established in 1992 to coordinate logistics-related activities on Georgia Tech's campus. The focus group included representatives from American Italian Pasta Company, BP Fabrics and Fibers, Bush Brothers and Company, Defense National Stockpile Center, Department of Defense, Expotran, FedEx Supply Chain Services, Groenewout Consultants & Engineers, Milliken & Company, NCR Corporation, Office Depot, PPL Services, The GAP, and Vistakon/Johnson & Johnson Vision Care.