We have recently implemented automatic reservations in our system for customer orders to attempt to give customers a better real time knowledge of our inventory availability. We are currently reserving blanket orders 60 days out due to items with longer lead-times, while all other orders 365 days out to capture anything that may have got an extended lead time due to supply chain issues. We are experiencing issues in that we are increasing inventory levels by so much due to the amount of blanket orders we service and this is putting a stress on our total inventory value. Have you or other customers used automatic reservations and how has it affected your business? Do you have solutions or tips for ways to handle automatic reservations better?
From experience, 365 days out is an extreme length of time. You will be constantly tying up inventory and pushing to order more that you likely won’t need by that time.
You should start with a much shorter time of 15 - 30 days and work yourself out to find a balance point. The results you are seeing are exactly what I would expect by jumping into such a wide open range.
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