{"id":26758,"date":"2020-09-21T12:28:19","date_gmt":"2020-09-21T16:28:19","guid":{"rendered":"https:\/\/stageres.blueridgeglobal.com\/?p=26758"},"modified":"2025-09-15T19:48:56","modified_gmt":"2025-09-15T23:48:56","slug":"11-benefits-of-shifting-inventory-risk-onto-the-manufacturer","status":"publish","type":"post","link":"https:\/\/blueridgeglobal.com\/blog\/11-benefits-of-shifting-inventory-risk-onto-the-manufacturer\/","title":{"rendered":"11 Benefits of Shifting Inventory Risk onto the Manufacturer"},"content":{"rendered":"

\"who-should-own-inventory-risk\"<\/a>\u201cWho should own inventory risk?\u201d That question was posed \u2013 and answered \u2013 by SupplyChainBrain<\/em>\u2019s Think Tank.<\/p>\n

You can read their article here<\/a>. In short, SCB Contributor M. Scott Moon proposes shifting inventory risk onto the manufacturer, rather than the seller.<\/p>\n

\u201cThe time is right to fundamentally change the way we think of inventory (and the sophistication of the tools and techniques for planning and managing it), and the relationship between a manufacturer and selling locations.\u201d<\/p><\/blockquote>\n

Margin Tug-of-War<\/h3>\n

Rather than manufacturers and sellers pushing\/pulling over pricing and margins, these 2 players become partners. Manufacturers would support their sellers in making goods available as needed. They would assume the inventory risk, command a higher price for taking on that risk, and deliver products in a more timely and efficient manner.<\/p>\n

Simply put, the time is right to create an aggregate demand signal. Enterprise-wide synchronization between Sales and Operations Planning (S&OP<\/a>) is key.<\/p>\n

Create a Win-Win-Win<\/h3>\n

Leveraging supply chain collaboration tools<\/a>, manufacturers and retailers could achieve these 11<\/strong> benefits<\/strong>:<\/p>\n

    \n
  1. Position product close to end-customers. Orders could be completed from the closest location \u2013 without increasing inventory.<\/li>\n
  2. Faster delivery times and lower costs.<\/li>\n
  3. Better use of inventory and capital devoted to making goods.<\/li>\n
  4. Less pressure on retailers to lower prices, or on manufacturers to reduce their selling cost.<\/li>\n
  5. Less risk to sellers to procure goods, store them, sell them to a customer, then incur the cost of returns.<\/li>\n
  6. Manufacturers can make goods available as needed, reducing inventory in the entire pipeline (manufacturer, DC and seller store), allowing sellers to lower investment and risk in salable goods.<\/li>\n
  7. Drop-ship opportunities would expand and slower movers could be stored collectively and shipped only as needed, reducing perishable loss.<\/li>\n
  8. Long lead-time activities (such as replenishment<\/a>, floorset transitions and event preparation) could be streamlined with flow moving directly to the end consumption point with minimal seller risk<\/li>\n
  9. An aggregated demand signal would help minimize inventory in the entire supply chain network, while improving customer experience.<\/li>\n
  10. Ability of manufacturers to focus on producing goods based on consumer demand vs. seller demand.<\/li>\n
  11. Sellers would reduce their end-of-season overstocks, maintaining profit margins and customer satisfaction.<\/li>\n<\/ol>\n

    So what do you think? Is this a viable solution? Is your organization set up to support this level of supply chain collaboration? If not, check out our Integrated Business Planning solution<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    \u201cWho should own inventory risk?\u201d That question was posed \u2013 and answered \u2013 by SupplyChainBrain\u2019s Think Tank. You can read their article here. In short, SCB Contributor M. Scott Moon…<\/p>\n","protected":false},"author":36,"featured_media":28111,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[69,51],"scp_topic":[184],"sector":[179],"technology":[177],"class_list":{"0":"post-26758","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-blog","8":"tag-sales-operations-planning","9":"tag-wholesale-distribution","10":"industry-generic","11":"scp_topic-disruptions","12":"sector-distribution","13":"technology-generic"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/posts\/26758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/comments?post=26758"}],"version-history":[{"count":1,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/posts\/26758\/revisions"}],"predecessor-version":[{"id":35513,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/posts\/26758\/revisions\/35513"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/media\/28111"}],"wp:attachment":[{"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/media?parent=26758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/categories?post=26758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/tags?post=26758"},{"taxonomy":"scp_topic","embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/scp_topic?post=26758"},{"taxonomy":"sector","embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/sector?post=26758"},{"taxonomy":"technology","embeddable":true,"href":"https:\/\/blueridgeglobal.com\/wp-json\/wp\/v2\/technology?post=26758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}