https://www.mdu.se/

Effective inventory management is pivotal for balancing sales and operations planning (S&OP), operational efficiency, and working capital in manufacturing. This study examines inventory management practices at a global hard metal manufacturing organization to identify inefficiencies and propose actionable improvements. Adopting an abductive research approach, qualitative data were collected through semi-structured interviews with six key stakeholders across production, finance, and procurement departments. The analysis revealed three critical inefficiencies, firstly, reliance on manual processes and fragmented systems, such as siloed ERP software and Excel-based planning, which introduce errors and hinder real-time visibility secondly, forecast inaccuracies exacerbated by geopolitical risks, supplier-imposed minimum order quantities (MOQs), and volatile demand, and thirdly misalignment between global and local strategies, such as rigid economic order quantity (EOQ) mandates and local operational realities, including safety stock requirements for critical materials like cobalt. These gaps undermine S&OP adherence, inflate working capital, and reduce operational efficiency. To address these challenges, the study recommends integrating ERP systems to eliminate manual reconciliations, adopting AI-driven & software tools for demand forecasting and raw material planning, and decentralizing S&OP cycles to incorporate local demand signals. Cross-departmental key performance indicators (KPIs) and hybrid inventory strategies blending just-in-time (JIT) principles with buffer stocks are proposed to enhance collaboration and resilience. The findings underscore the need for adaptive inventory models that reconcile theoretical frameworks with contextual complexities, such as supply chain disruptions and technological constraints. By prioritizing technology modernization and fostering cross-functional transparency, manufacturing organizations can achieve a responsive, cost-efficient, and customer-centric inventory management system. This study contributes practical insights for large-scale manufacturers navigating the evolving demands of globalized markets while advancing inventory management theory through sector-specific adaptations.