Adapting the Analytical Hierarchy Process to Identify Inventory Risk

The telecommunications industry is characterized by short product life cycles, driven by rapid market development and sometimes by new technologies emerging from internal and external research and design activities. These innovations cause product changes ranging from cosmetic, such as re‐packaging an existing product, to fundamental, such as introducing a completely new concept. The challenge for telecommunications manufacturers is to have the correct inventory in place for product launch and subsequent consumer demand. However, there are some categories of components that can cause serious inventory management problems and risk. We use the Analytical Hierarchy Process (AHP) in a specific telecommunications case study, and propose new strategies to manage high risk categories of stock. We identify ways of containing those risks through product design strategies, adapting MRP systems, better supplier control and a closer liaison between marketing and manufacturing activities to better anticipate change.