Utilization refers to the extent to which a company’s resources—such as labor, equipment, warehouse space, and transportation capacity—are effectively used to meet supply chain objectives. High utilization means that assets are being maximized to their full potential, which can improve efficiency and reduce costs.However, there is a balance to strike because over-utilization can lead to bottlenecks, increased wear and tear, and reduced flexibility. In inventory optimization, proper utilization ensures that storage spaces and transportation are used efficiently without causing delays or excess inventory buildup due to capacity constraints.
