The aim of inventory control is to provide the maximum service level at the least possible cost. Often companies struggle to achieve it by using the same policy for all the products in their portfolio.
Better forecasting methods, better inventory management methods, and the method to implement them in a segregated way are the keys to achieve higher service levels at a lower cost.
Why do it ?
Especially in customer goods and retail industries, businesses are motivated to spend what ever necessary to maintain high level of service level thereby not loosing customers.
This often results in very high levels of inventory, inefficient production and transportation resulting in unreasonable costs.
Details
Not all SKUs are identical. Therefore, selecting the same replenishment/inventory strategy is not ideal. Following such as unified strategy results in higher expediting, and lower service levels. Both of which are expensive.
While companies do sometimes follow the ABC classification method, a different way of segregating SKUs has been recently explored, i.e. based on Forecastability.
