Key Frameworks, Models, and Theories in SCM
Drew Dale · 2026
This chapter provides a comprehensive examination of Strategic Inventory Management and the transformative role of technology within the modern supply chain. The core purpose of effective inventory management is defined as balancing customer service against operational costs to enhance a company&s;s market competitiveness. Inventory Strategy and Models The document details the different types of inventory – including raw materials, work in progress, finished goods, and safety stock (SS) – and outlines the various functions of inventory, such as leveraging economies of scale and meeting variable demand. Key inventory models are presented, including the Economic Order Quantity, which minimises total ordering and holding costs. It also covers Just-In-Time principles, emphasising the reduction of waste and achieving minimal inventory levels. The role of SS and its calculation is explored as a critical buffer against demand and lead-time volatility. Technological Integration The chapter then shifts to the powerful influence of technology in enabling advanced inventory practices. Essential Supply Chain Management technologies are discussed, including: Enterprise Resource Planning systems, which integrate functions across the business. Warehouse Management Systems, which optimise storage and material flow. Internet of Things sensors and Radio-Frequency Identification, which provide real-time visibility and accurate tracking. Artificial Intelligence and Machine Learning, which enhance demand forecasting and dynamic pricing. Risk Management and Conclusion Finally, the document addresses inventory risk management, highlighting strategies such as ABC analysis for prioritisation, dual sourcing, and the importance of digital twins for scenario planning. By strategically aligning inventory policies with technological advancements, businesses can achieve a competitive edge by lowering operational costs, improving agility, and consistently meeting customer expectations.