Effective Inventory Management is About Being Responsive to Change
Manufacturers have invested billions in inventory management programs and inventory optimization software to no avail. Despite substantial investments, meaningful inventory reductions remain elusive. Given the volatility in today's supply chains, ensuring the right inventory is in the right place at the right time is not a static inventory optimization problem.
Decisions are made every day to determine how inventory should be placed and moved. In today's highly dynamic world, without immediate and comprehensive inventory analysis across your global supply chain, you risk expensive and flawed actions with each decision — the cost of which are lost sales, lower profits and excess inventory.
The key to a breakthrough in inventory management is to address the root cause of the problem — empowering the organization as a whole to be more responsive to change — and that can't be delivered by an optimization engine.
There are a significant number of variables that affect inventory and each variable implies risk. To effectively manage risk, you need to
- Model inventory variables on the fly
- Project inventory levels
- Be alerted to inventory imbalances
- Evaluate course correction alternatives and take action quickly
When supply chain decision makers are empowered with solutions that deliver global supply chain visibility and capabilities to drive not only improved planning, but also response management, they are able to leverage inventory assets more efficiently and make more effective inventory management decisions for the company.
There are a number of RapidResponse® capabilities as part of a control tower solution that help ensure inventory analysis is a continuous, value-driven activity leveraged in a variety of ways across multiple business processes. With RapidResponse, supply chain analysts, inventory managers and others across the organization can:
- Import data from multiple disparate ERP systems within the supply chain network to support an enterprise-wide view of inventory levels
- Trace the flow of inventory from purchased items, through work-in-process (WIP), to finished goods, and finally, delivery to customers. Filter inventory data, as desired, by site, business unit or product
- Model and set inventory targets and drive replenishment based on those targets
- Calculate projected excess inventory over varied time horizons to understand the inventory liability of decisions
- Align global inventories by understanding where shortages exist in one site and excess material at another site
- Simulate (at any time and with unmatched speed) various business conditions and inventory strategies to obtain a forward-looking view of the specific impact it has on inventory metrics. For example, users can
- Model the effects of different inventory policies such as multi-tier considerations, postponement, seasonality and multi-sourcing
- Model decisions made during the S&OP cycle to understand impact on inventory targets
- Simulate the use of item substitution, or "borrow and payback" opportunities across customer contracts / demand pools
- Compare and select particular effectivity dates for engineering changes, new product introductions and/or product phase-outs
- Improved margins
- Reduced inventory levels
- Avoidance of shortage conditions
- Improved customer service levels