Most Inventory Software Fails to Keep Pace

There's little disagreement that "optimizing" inventory levels across the enterprise is a very good thing. At its core, the entire premise of supply-demand balancing that is at the heart of supply chain management is about optimizing inventory. The ultimate goal, of course, is to ensure you have the right inventory in the right place at the right time while minimizing costs and meeting customer service requirements.

Inventory software has been developed to optimize inventory positions and levels based on a set of assumptions about supply, demand, service levels and other factors. They start by looking at inventory levels across the supply chain, considering the impact inventory at one level has on others. Inventory software will help optimize and continually update safety stock across tiers of the supply chain.

The last area of focus for inventory software is to try to account for variability in demand or supply plans when recommending inventory levels. However, most of these inventory management software solutions rely on averages in planning inventories, which can lead to significant problems.

Inventory Management Must be Responsive to Change

Given the volatility in today's supply chains, effective inventory control and inventory management cannot be achieved when inventory software works solely on optimization based on assumptions and averages. The problem is that such inventory software is producing the wrong optimal plan as assumptions rapidly change and volatility wreaks havoc on historical averages.

What's needed to deal with today's realities is inventory management software that enables you to simulate inventory levels, safety stock and order policies to predict with confidence the best course of action in order to realize needed inventory reductions without negatively impacting delivery performance.

Kinaxis™ RapidResponse™ is inventory software designed for today's requirements. With RapidResponse, you can simulate things like order priority to ensure limited supply is being utilized as effectively as possible. You can simulate the best cutover engineering change cutover dates and new product introductions to avoid excess inventory and shortage conditions.

Effective inventory management starts with a solid plan, but today's realities place new requirements on supply chain organizations to effectively respond to quickly changing conditions while ensuring they deliver inventory reductions and customer satisfaction. This is no simple challenge, but the right inventory software can ensure you meet these challenges.