5 Steps To Inventory Optimisation

That Guarantee You Have The Right Stock, In The Right Place, At The Right Time... 

To discover how to address the 5 Steps of Inventory Optimisation
Download your FREE eBook now

"We have gone from a rather chaotic situation with 36 different databases at the same number of sales/warehouse outlets to one central system that gives us great visibility and full control."
Martin Brown, General Manager Information Services, The Laminex Group

Is it an essential requirement for your company to be able to meet customers’ requested service levels with a minimum amount of inventory?

Are you finding it a challenge to have the right products in stock and virtually nothing else? Excess
stock means excess capital outlay, which has a massive impact on your bottom line
profit. Is your aim to balance this against the potential damage of having insufficient stock leading to lost sales, lost customers and a negative impact on your business?

In reality of course, all this is rather tricky...

 
Martin Brown, General Manager Information Services. The Laminex Group


With the diversity of products held in many inventories and across different industries, each with different needs and potential, allied to changing market conditions and customer demand, inventory management is a complex and potentially expensive function.

At the same time, there are also internal challenges – even differing priorities – within the organisation. CEOs want to improve customer service, sales want more products to sell, and CFOs want to reduce inventory.

This eBook gives you an overview of the concept of inventory optimisation. Surprisingly, while this is the area where most ERP (Enterprise Resource Planning) software implementations normally get their highest and fastest return on investment, it is also true that many companies that have implemented ERP have not yet added a dedicated inventory optimisation module. There is a huge potential for your company to maximise the value of its IT investment for a relatively small incremental investment... 

 20% increase in stock turnover; improved customer satisfaction
     AD Instrument, Australia 
 Inventory levels reduced 15%, on-time order fulfilment at 97%
    Carl Kammerling International, UK 
 Savings of EUR 250,000 per year on inventory; 20% higher stock turnover
     Fogliani, Italy 
 Inventory accuracy up to 99.8%
    JC Paper, US 
 17% reduction in stock holding; A$18 million saved in inventory costs
     Laminex, Australia 
 Stock levels reduced 25%, stock turnover increased from 12 times to 17 times
     Galexis, Switzerland

The benefits of inventory optimisation are felt throughout your organisation – in your warehouse, in sales and marketing and in your finance office, like: 

 Enhanced your customer service through increased competitiveness, improved fill rates, fewer
     shortages, and on-time deliveries; 
 Reduce your working capital requirements through reduced amount of stock and less obsolete
     stock; 
 Lower your transaction costs through more efficient processes.

To optimise your inventory – to have the right item, in the right place at the right time – is a constant balancing act that consists of five different steps:

1. Analyse your current situation, see what items are selling and assess delivery performance, etc; 
2. Classify your items into different categories that can be handled with ease, and define the strategy per product segment that prioritises to maximum effectiveness and efficiency; 
3. Calculate your forecast as well as possible, adopting different but relevant policies on different segments; 
4. Control your costs by optimising replenishment, adopting different replenishment policies on different item segments; and 
5. Replenish with the best possible collaboration with your suppliers.

Inventory optimisation is no longer optional but an economic and logistics necessity. It offers you the potential to save on space, time and costs, as well as freeing up your working capital that could be more effectively used for other projects and activities.

The objective of your inventory management system is to provide the best possible customer service within the restraint of the lowest practical inventory costs. Inventory optimisation offers you the tools to help you achieve those aims. 

To discover how to address the 5 Steps of Inventory Optimisation
Download your FREE eBook now
 

Step 1: The case for inventory optimisation – How to balance your inventory levels and lower costs
 Meeting your customers’ service level hopes 
 Minimising your stock holdings

Step 2: How to analyse your inventory performance 
 Measuring your sales, volumes and delivery performance 
 Measuring your supplier performance, fill rates and times

Step 3: How to classify your products and define your strategy 
 Segmenting your products according to value, movement and lead times 
 Strategising each product segment for optimal service levels 
 Applying different rules for your different segments

Step 4: How to calculate your product forecast 
 Detecting your repeatable demand patterns for accurate statistical forecasting 
 Demand planning to meet your sales and marketing initiatives

Step 5: How to optimise your product replenishment 
 Streamlining collaboration with your suppliers 
 Increasing your supply chain efficiencies

About the Author, Peter Clarke, is the Chief Technology Officer at IBS Asia Pacific.

With more than 20 years of experience in product and applications development, project management, and customer support management roles, Peter Clarke has led ERP and SCM projects for customers such as The Laminex Group (Australia & New Zealand), Sigma Pharmaceuticals (Australia), Miele and Hino (Australia & Asia).

As such, Peter can offer insights into supply chain collaboration and visibility, demand planning and forecasting (inventory optimisation), e-Commerce, enterprise applications integration, as well as business performance management.

As Chief Technology Officer at IBS Asia Pacific, Peter directs the development of integrated ERP solutions for optimising the supply chains of customers in Asia, Australia and New Zealand, across industries such as automotive, electrical, consumer durables, and paper & packaging.