Complex Environment Creates Inventory Challenges
Inventory management has become more challenging in today’s complex and competitive business environment. Yet many companies are still maintaining inventories manually, and performing complicated computations using spreadsheets and point solutions. Keeping track of reorder points can become an overwhelming task as businesses grow. And standard spreadsheets offer little help in driving down costs and improving revenues because they are time consuming and frequently contain multiple errors. Ray Panko, University of Hawaii compiled data from numerous studies that indicates up to 90% of spreadsheets contain significant errors.
Where is the money hiding?
It is common to find excess and obsolete stock representing thirty-sixty percent of inventory and to find that five-forty percent of the time customer demands cannot be met (based on Valogix’ experience). At worst, companies lose sales; at best, they must ship items at a premium in order to fulfill orders, further driving down the profit margins.
There is good news on the (inventory planning) horizon
Automated planning tools are designed to remove complexity and improve inventory mix. They dramatically reduce the amount of time required to properly plan inventory. By automatically forecasting, replenishing and optimizing, companies can manage inventory more efficiently and meet the demands of customers and suppliers at lower costs for a powerful competitive edge.
Automated planning tools work in conjunction with ERP software to improve the inventory planning processes. Automated tools consider several factors—budget, carrying costs, planning horizon, leads times and more to create an optimal stocking quantity. The entire planning process must be in sync to create a plan that works from forecasting to setting stock and calculating replenishment levels, and from purchasing to production. New advances in technology provide more powerful solutions.
So what does the new technology provide?:
• Provides automated planning tools that improve inventory investment
• Empowers companies to meet demands of customers and suppliers at lower costs
• Helps reduce stockouts and overstocks, shipping costs and lost sales
• Reduces overall inventory and helps increase productivity
• Delivers high performance, efficiency and interoperability
• Cloud-based application lowers upfront costs and increases accessibility
Inventory planning is a competitive advantage
Advanced inventory planning and optimization not only automates the entire planning process, it also dramatically increases positive cash flow. Smartly reducing inventory, mitigating stockouts, decreasing expedited shipping costs as well as planning time mean less money going out, and more money to invest in the business. Increased sales and productivity gains add to the competitive advantage.
Inventory optimization has big payback
• Reduced inventory investment by at least 20%
• Reduced expediting and emergency shipments by 35%
• Improved planner productivity by reducing planning time by 60% - 80%
• Ability to control and reduce replenishment spending by 15%
• Stockouts reduced by 12% - 22%
• Increased productivity by 5% to 10%
• Improved employee and customer satisfaction