There are many ways to fail at inventory optimization but we list three primary causes and welcome your ideas and comments.
1) People don't understand basic inventory concepts.
This problem is rampant in industry. Even many of the purported "expert" organizations offer advice that is wrong or improperly applied. A common mistake is not understanding basic relationships like:
Reorder point = Replenishment time demand + safety stock
Reorder quantity = daily demand x days of supply
If you have a reorder quantity of 100 in your system for a part that has a demand of 10 per day, you should not also have days of supply set to 5 and then try to decide which approach (days or supply or fixed reorder quantity) is best--the two stated polices are not equivalent. This inevitably points to an incomplete understanding of the underlying mechanics of optimal inventory control. There are many other similar problems such as confusing DOS with lead time--the two are almost always different.
2) Technology solutions are oversold
Software companies exist because they sell software. Analyst companies exist because they sell advice. No software company is going to tell you, "Actually basic MRP can work pretty well, you don't need new software." See chapter 7 in Factory Physics for Managers for detailed description of how you can use your existing MRP system to control immense detail, get predictive performance, and manage more easily in the face of product variation and demand variability. Hint: The approach does NOT use MRP as it was originally designed for detailed scheduling.
No analyst company is going to tell you, "We have run a similar survey about 10 times before but we are framing the same topic in terms of the latest hot concepts so we can sell more sponsorship." The software industrial complex (software companies, analysts and consultants) has mutually aligned goals. More new and different software presents more opportunities to sell software. More new software presents more opportunity for analysts to sell survey results to industry explaining the ins and outs of the new software. The underlying relationships between inventory, capacity, response time and variability are is impermeable as the law of gravity. However, you won't find software companies or analysts often talking about how their products or concepts work with these fundamental relationships.
3) Management ignores training
This is a combination of items 1) and 2) but the responsibility falls directly in management's lap. Planners and buyers are some of the most critical resources for insuring that a company meets its performance goals. Yet it is amazing how many companies provide little to no training for these key resources. The typical attitude is that a person only requires street smarts to use a company’s bazillion dollar supply chain or operations technology. Street smarts are good, don't get us wrong, but we're not going to hire a guy off the street to maintain our Lamborghinis just because he talks a good game. OK, so we don't actually have Lamborghinis but you get the point. Training most often consists of sitting next to someone who has been using the system and watching what they do--this may or may not be good. How does management know that the experienced hands understand basic operations science?