Echelon Inventory

In: Business and Management

Submitted By brianwb1
Words 320
Pages 2
What is ‘echelon inventory policy’?

Within our readings for this week, Simchi-Levi makes discussion referencing to a concept called ‘echelon inventory Policy’. What is ‘echelon inventory?

It took quite a while to research what exactly echelon inventory is. Even when browsing the World Wide Web, definitions for the key words ‘echelon’, ‘echelon inventory’, and the like, turned up with very abstract notations but no real definition. In fact, the notations discussed multi-echelon inventories…. Even with that, no definition. I have to surmise it is a fancy word for something simple…. Good ‘ol jargon.

To relate it to non-management terms, in highway maintenance, the term ‘echelon’ is referred to a particular arrangement, or formation (position). For instance, when plowing snow off a multi-lane highway, trucks would be staggered in an arrangement where the second truck would be behind the first, but off to the left or right as to pick up what the 1st plow left plus his part of the road.

In Supply Chain Management, ‘echelon’ refers to inventory and the position in with it is located within the organization. In a white paper prepared by Manhattan Associates, Manhattan defines echelon as “… tiers in the distribution network.” It appears multi-echelon and echelons are synonymous; I don’t know for sure. Manhattan’s paper continues to discuss multi-echelon supply chain as where a manufacturer would have a warehouse (or several—that’s multi-echelon) where it stores its product. From there, product is distributed to local or regional warehouses prior to being shipped to store locations.

Without going into a complete analysis and report, a real life example would be Anheuser-Bush Companies.

Sources:
Manhattan Associates. 2011. Multi-Echelon Inventory Optimization. Retrieved on February 27, 2011 from…...

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