Why it pays to invest in inventory solutions
There are many reasons or excuses for not upgrading to a modern, easy to use advanced inventory tool. Which Category do you fall in?
Internal effort to implement, meaning it will take too much time and effort
We will be able to manage our inventory effectively with an advanced inventory solution into the foreseeable future
Cost of software and services
We are too small
Solutions are too complicated
Based on a recent survey of Supply Chain Officers, some of the key reasons for not upgrading to better planning solutions are mind boggling. Here are the top two:
Hard to justify the cost
Unlikely to get a budget
Advanced inventory planning and optimization solutions have proven over the years to provide solid paybacks and in most cases return far more than their cost. That is unless a company over-engineered the project and spent untold millions and years to get a solution implemented. There are very affordable solutions that provide genuine scientific optimization and tremendous results.
Investing in smart solutions that improve your inventory planning is an important business decision and necessary in today’s global and troubled economy. Sometimes the concept of spending money to save money is very hard to accept. There are no guarantees the investment will pay off, so there is some level of risk involved. But, is it any riskier to do nothing? To maintain the status quo?
There is a saying “you don’t know what you don’t know.” So, how do you find out what’s right for your business? You may think your inventory is under control, but can you be sure? You may be waiting for the economy to improve. It’s now been several years since the downturn how much longer can you afford to wait? Your competitors are not waiting.
By putting off using an advanced inventory planning and optimization solution, you are missing out on the opportunity to free up money and resources. Advanced inventory planning and optimization software not only automates the entire planning process, it dramatically increases the positive cash flow of a company. By smartly reducing inventory investment, reducing stockouts, decreasing expedited shipping costs, and reducing planning time all contribute to more available cash. Add to that increased sales and productivity and the gains will also lead to an improved competitive advantage.
By putting off using advanced inventory planning and optimization solutions, you are missing out on the opportunity to free up CASH. Cash right now, that’s at hand sitting in your inventory. As an example, based on an inventory value of $1,000,000 and an average inventory reduction and productivity gains of approximately 20% - 30%, as much as $200,000 to $300,000 in positive cash flow can be realized. That is anywhere from $16,666 to $25,000 per month.
If your inventory investment is $5,000,000 a 20% reduction means a $1,000,000 savings. When you calculate the monthly savings it equates to 19% of the total inventory reduction. This is a combination of reduced cost of money, insurance, warehouse cost, personnel, etc. That’s $15,833 every month and in the first year adds almost $190,000 to your bottom line.
Waiting costs you thousands of dollars every day, disrupts your business and antagonizes customers and employees. Some solutions are web-based and can be implemented in an easy-to-afford SaaS model or installed On-Premise.
Why wait? It doesn’t get any easier or better than this.