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Posted by Dave Food on Apr 3, 2018 2:39:32 PM
Dave Food

What is Inventory Optimisation Management?


Balancing Your Inventory and Your Consumer Demands

What is Inventory Optimisation Management?

Organisations must have the right amount of Inventory, in just the right places, and at the right time to meet the customer demands., this helps achieve Inventory Optimisation Management in your Supply Chain.

There is a significant focus on New Products (after all innovation is key) with this tendency to launch new products: there is an unbelievable amount of new consumer items being launched every year, causing demand uncertainty; product lifecycle shortening producing market life uncertainty and the diversity of channels through which products are sold continue to increase, channel diversity. What are the answers to cope with this customer personalised-demand approach?

The introduction to the market of this huge amount of new products comes down to two basic but vital capabilities: including Forecasting and Inventory Optimisation Management, being both dynamic and responsive.

Smart Supply Chain planners use multiple fine-tune forecasting methods to perform well at different phases of the product lifecycle. An Inventory Manager might overbuy or overcut cycles leading to the worst profit; too much inventory causes obsolescence, or too little can lead to missing sales opportunities, consequently, causing a direct negative impact on revenue. Given the market dynamics and the increased level of global competition, gaining even a small edge in Inventory Optimisation Management efficiency can pay huge customer and financial dividends.

Benefits a company can achieve when an Inventory Optimisation approach is applied:

• Can model inventory across the end-to-end Supply Chain in whatever form that inventory takes (raw material, working processed, finished goods, etc.).

• Helps you to determine the best locations to pre-position your product.

• Reduces the finished goods inventory.

• Transportation costs are reduced.

• Reduction in inventory obsolescence, increasing the Inventory value.

• Reduce Inventory holdings.

• Suggest how to adjust Inventory positions to maximise new product availability.

Capabilities needed:

1. To apply different forecasting techniques at different stages of a product’s lifecycle.

2. Launch profiles of previously introduced products.

3. Grouping similar products based on product and market attributes and demand signals.

4. The forecasting technique can be switched to a statistical modelling.

5. Adjust based on real-time demand signals and recommend holistic inventory adjustments across the entire network.

6. Recognising the interrelationships between Supply Chain stages, displaying different levels of uncertainty.

7. Reduces inventory overbuys and overcuts.

Inventory Optimisation Management can help you forecast and optimise your inventory to balance it with your new customer personalised-demands. The key is to pick the most effective and flexible forecasting models, to gain accuracy and meet your profit goals.


Dave Food

Prophetic Technology

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