RapidResponse Inventory Optimization Icon

Have you ever had a lot of finished goods inventory, but it wasn’t what the customer wanted? Or maybe you had a long lead time component that held up production. Perhaps you’re achieving your service levels, but at a high inventory cost. If any of these have been a struggle for you, there’s a way to meet your customers’ needs efficiently and at a lower cost.

The Inventory Planning and Optimization application in RapidResponse provides the capability to determine optimal inventory strategies and policies that support required customer service levels across several echelons of a supply chain. It also supplements traditional inventory management with sophisticated inventory optimization tools, specifically single-echelon inventory planning (SEIP) and multi-echelon inventory optimization (MEIO).

Tailored for Your Business

RapidResponse applications are based on best-practices and standard process flows established by our years of successful deployments at a multitude of world-leading manufacturers. The out-of-the-box Inventory Planning and Optimization application enables quick implementations and also acts as an advanced starting point for a tailored solution that meets your company’s unique needs.

The Added Value of Integrated Applications

Depending on the need, significant added benefits can be achieved from using the Inventory Planning and Optimization alongside other applications to ensure synchronization across interrelated planning processes. Companies that use our inventory planning software application will have also subscribed to the Inventory Management application.

Companies that use the Inventory Planning and Optimization application will have also subscribed to the Inventory Management application.

Inventory Planning and Optimization Related Applications Honeycomb Chart

RapidResponse Inventory Optimization Icon

Benefits

  • A systematic and statistical way to effectively cover supply chain risks
  • An ability to make informed tradeoffs between service targets and inventory levels to maximize corporate performance
  • Improved inventory turns
  • Reduced inventory holding costs
  • Consistently achieved customer service targets

Functional Capabilities

Single-echelon inventory planning (SEIP)

  • Identify strategic safety stock inventory levels based on customer service levels, supply variability, forecast error and bias
  • Generate stationary or time-phased safety stock requirements
  • Provide override capability to modify computed safety stock levels based on capacity and expiry constraints
  • Synchronize safety stock changes with ERP

Multi-echelon inventory optimization (MEIO)

  • Compute optimum levels of safety stock across several levels (echelons) of the supply chain with the objective of minimizing holding costs
  • Accurately represent the supply chain and configure calculations by:
    • Incorporating measures of service and processing times in the optimization computation
    • Identifying nodes within the multi-echelon network as non-inventory carrying (cross dock) as applicable
    • Using either standard costs or an item’s cost attributes (e.g. labor, material, overhead costs) to compute the optimized levels of inventory

IP Inventory Planning workbook

Managing Performance

In addition to the standard corporate measures of revenue, margin, on-time delivery and constraint utilization, metrics associated specifically with inventory planning are included in the application’s out-of-the-box dashboards. This allows for focused management of the performance measures that are most applicable to the function at hand.

Added measures presented in the Inventory Planning and Optimization dashboard include:

  • On Hand vs. Target—a dollarized measurement of actual inventory by part class (e.g. finished goods (FG), semi-finished goods (WIP) and raw material (RM)) compared against the annual plan.
  • On Hand by ABC Classification—a dollarized measurement of actual inventory by ABC classification of parts compared against the annual plan.
  • Demonstrated Service Level—the demonstrated customer service level percentage (on-time delivery), per period, compared against the annual plan.
  • Periods of Supply by Part Category—a measurement of the number of periods of supply that the ending inventory balance (per period and category) is expected to cover.
  • Excess Value—a time-phased measurement of the excess value over a horizon.
  • Obsolete Value—a time-phased measurement of the obsolete value over a horizon.

RapidResponse Inventory Optimization Icon

Inventory Planning and Optimization Process Components

The following graphic illustrates the out-of-the-box Inventory Planning and Optimization application process. This process can be tailored to meet your company's specific business needs.

Inventory Planning and Optimization Process Flow Chart

RapidResponse Inventory Optimization Icon

Closing the Loop

The Inventory Planning and Optimization application has the ability to ‘close the loop’ on data to the transactional system (ERP), whereby you can send data that is created/edited within RapidResponse back to the transactional system automatically. This avoids a user having to update two systems.

In the Inventory Planning and Optimization application, accepted/approved safety stock quantity changes are captured and can be sent back to the transactional system.

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Hubbell Managing Demand Variability

Hubbell - Managing Demand Variability

MC Assembly Improving Inventory Turns

MC Assembly - Improving Inventory Turns