Inventory optimisation is an ongoing balancing act between investments in stock and the service level goals of your organisation. However this simplistic view has many other considerations to be included into the equation for completeness. These include understanding the business costs for holding stock, supplier lead times, order quantities and display levels. In total, what started off as something quite simple, quickly becomes a mind boggling calculation requiring complex algorithms working behind the scenes. There are many inventory planning solutions available from large enterprise companies, which can be extremely complex and expensive, fully in house developed systems and basic individual module solutions off the shelf. All such systems play an important role in inventory optimisation. However, irrespective your system and its levels of sophistication to significantly improve inventory optimisation it has been repeatedly shown that there is a vital role for decision makers with a robust understanding and visibility of their supply chain.
Over the years at Sigma our experts have developed analytical, interrogation and problem solving techniques to work along side inventory systems to optimise inventory levels. Working in a range or retail organisation these techniques have helped retailers achieve some of the highest inventory stock turn figures, whilst exceeding on shelf availabilities in excess of service level expectations. Irrespective of the sophistication of your current inventory or replenishment systems we can help you further optimise your inventory.
Even the most sophisticated inventory systems require decision makers.
The business benefits of optimising inventory are very clear. What is also very clear is that the only way to do this is by creating working synergies and operational practice between systems and inventory operatives. We can help develop such systems and process in your business, specifically looking to improving the following areas.
♦ Increasing stock turn / reduced weeks cover and improving business cash flow.
♦ Improving inventory visibility and performance metrics for better decision making.
♦ Higher service levels – leading to improved availability throughout the supply chain
♦ The identification of better working process and tools for inventory managers.
♦ Reducing stock management and movements costs.
There are numerous costs associated with carrying, holding and managing inventory that are worth understanding in detail and targeting for reduction. Many of these costs are steadily increasing every year, typically freight, warehouse storage and movement costs as well as the hours taken to plan, place orders and manage the inventory. Excessive ordering directly impacts on the financial performance of inventory in multiple ways not only cash flow but also with dead stock, clearance and write down impacting on margin and sell through. Ultimately financial performance is directly attributable to the alignment of your inventory in-line with expected customer demand and the more stock you carry the more it costs.
Financial performance is directly attributable to stock ordering
The forecasting and planning of your inventory are open to many known and unknown variables all of which can affect your inventory and subsequent customer service levels. For many organisations, through inventory optimisation, reduction in stock of between 20% to 40% are not unusual and with positive impacts begin felt on other cost related areas. The objective of inventory optimisation remains the same irrespective of your business model, establish ways to lower your costs, increase your services levels and deliver a higher level of satisfaction to your customers.
Give us a call to find out more about how we can help you.
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