Inventory Planning Blog

Key to Successfully Using Advanced Inventory Planning Solutions

Posted on Tue, Nov 19,2013@10:00 AM

Ease of Use is the Key to Successfully Using Advanced Inventory Planning Solutions

Valogix, inventory planning, inventory optimization, spreadsheetsDid you know that certain inventory planning solutions are easier to use than ever? Until recently Small and Mid-size Businesses (SMB) did not have affordable, easy to use software tools to help them effectively manage and balance their inventory investment. Software solutions that forecast, plan and optimize an inventory are found in widespread acceptance in large enterprise companies but these solutions can cost between hundreds of thousands to millions of dollars, take months to implement and are generally not affordable or usable by SMBs.

In the vast majority of companies, spreadsheets are the common tool in use. They are time-consuming to build and maintain, are usually static data repositories, and according to a prior study by a major consulting firm over 90% of them contain significant errors. But they do serve a purpose for reporting.

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.

Investing in smart solutions that improve your inventory planning is an important business decision. It may be counterintuitive; the concept of spending money to save money, but it is true with inventory optimization.  Managing your inventory manually can be not only time consuming but error prone as well. The challenges resulting from this inefficient process can be:

spreadsheets, waste, inventory optimization, inventory planning

  • Poor ability to recognizing “Demand variability”
  • Difficulty in setting and maintaining accurate stocking levels
  • Dealing with critical “Stock-outs”
  • Low inventory turns
  • Increase in excess and obsolete inventory
  • Inability to easily forecast more accurately
  • Wrong mix of available items
  • Added complexity in determining how much to order, when and where to stock

Some of these solutions have user-friendly interfaces that do not rely heavily on confusing icons and or abbreviations. They automatically do all the calculations and present the results in a clear, understandable fashion. This makes it easier to make key decisions about what to buy, how much to buy and when to have it available for sale.

Another facet of these easy-to-use solutions are the dramatic savings they provide. 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.

With these easy-to-use solutions, there is no need to put off using advanced inventory planning and optimization solutions. Every day you delay, you are missing out on the opportunity to free up CASH. Cash right now, that’s at hand sitting in your inventory.

Why wait?  It doesn’t get any easier or better than this.

Tags: Inventory Planning, inventory optimization, Valogix, Spreadsheets