Reports are indicating that companies are beginning to grow their
inventories, contrary to the massive reductions that occurred at
the start of the recession. However, most of these companies are
doing so without the necessary intelligence about where to invest
and how much. This is one of many benefits found through an
inventory optimization solution.
In a recent article written by Marisa Brown, Knowledge Center
Director at APQC, she methodically explains the key components of a
well-defined...
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Since 1997, we have witnessed dramatic improvements in the way
companies achieve targeted service levels at a lower cost, and
improve decision-making by leveraging inventory intelligence.
Imagine the opportunities available if your organization gained the
following results:
- Reducing inventory at Verizon Logistics by $40 million while
maintaining a 98.5% service level.
- Identifying 26% savings at WW Williams and greatly
reducing transfer expenses.
- Decreasing safety stock by 25% in half the projected...
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Inventory optimization is becoming more widely recognized as a
strategic planning tool in many manufacturing and distribution
circles. However, there remains many misconceptions about what
inventory optimization is and what results can be achieved.
Recently Howard Coleman, Principal with MCA Associates,
interviewed Tony Goncalves, Director of Supply Chain for
Northeastern Supply, about his use of an inventory optimization
solution. During their discussion, Tony describes how the benefits
of...
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Understanding the role inventory plays in financial statements is a
critical component of determining the value of an inventory
optimization solution. Writing for Supply Chain Digest, editor Dan
Gilmore walks through the benefits of reducing inventory, and the
impact it has on the Income Statement, Cash Flows, and Working
Capital.
In the article, Dan uses an example of a theoretical inventory
balance of $1 billion, and what effect a 10% reduction of inventory
would have on the business. While...
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Supply chain executives have a keen understanding that effective
inventory management is at the heart of business results. Yet, what
has been elusive to these same executives are how to execute
strategies that optimally balance supply with demand. According to
a recent study by CSCO Insights, they are recommending 5 key
strategies to align the inventory investment with business
objectives.
As part of CSCO's study, is a survey about current perceptions of
the effectiveness of the respondent's...
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Among concerns faced by supply chain executives around the world,
chief among them are fluctuating customer demand and variances in
customer requirements. Adding to these challenges is the need for
protecting margin and reducing working capital, as identified by a
recently released report from IBM titled, "New Rules for a New
Decade."
With consistent pressure for supply chain managers to create value,
end-to-end supply chain cost and pipeline inventory optimization
are predominant challenges. To...
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Responding to the economic crisis, many organizations quickly
reduced inventories in order to mirror new demand realities.
However, as signs increasingly point to a recovery, these same
companies are realizing that perhaps their inventory levels are too
lean.
In a survey published last month by Morgan Stanley, they found that
42 percent of the 500 respondents expect their ordering activity to
pick up in 2011. According to Morgan Stanley, these findings
suggest that the restocking activity of...
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Developing stocking strategies
for slow-moving inventory is an important aspect of improving
overall inventory performance. In order to create effective
strategies for slow-moving inventory, it is important to first
define what is considered slow-moving and then understand the
impact that segment has on business results.
We often find that slow-moving inventory accounts for a significant
percentage of an organization's total number of SKUs, but
represents small portion of revenue. As a result,...
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Results from the latest survey from eyefortransport, The Global
Supply Chain Office Strategy Report for 2011, reveals the top
challenges and projects for supply chain executives in the coming
year. Asking about potential challenges for 2011, the top 5 are:
- Demand Variability (42%)
- Cost Containment and Reduction (39%)
- Supply Chain Visibility (35%)
- Inventory Management (33%)
- Escalating Customer Expectations (33%)
Half of the respondents reported that they have are implementing or
plan to implement...
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Best in class companies are 5 times more likely to utilize a
multi-echelon inventory optimization solution than laggard
companies. - Aberdeen Group
It should be no secret that best-in-class companies apply effective
inventory management practices to achieve best-in-class results.
But what Aberdeen Group has accomplished in a recent brief is to
quantify how many companies are applying these practices.
The brief published in December recommends inventory optimization
strategies for the Chief Supply...
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Every industry involved with holding inventory runs the risk of
building slow-moving and obsolete inventory. Some organizations
have created positions with specific responsibilities for managing
this under performing asset.
In a recent posting by SupplyChainBrain, consultant Lora Cecere
offers three action points to address this universal challenge. The
three actions she suggests are:
- Some excess and slow-moving inventory develops from new product
launches. There must be a process in place...
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Best-in-class companies often find themselves under the microscope
of their peers because their peers want to mirror what they do in
order to achieve improved business results. The popularity of
specific business practices and ideas from best-in-class companies
can say a great deal about where other organizations see the
greatest room for improvement. For example, the most popular idea
during the past year is incorporating advanced analytics into
standard inventory planning practices. Other...
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A recent article in Supply & Demand Chain Executive
highlighted some of the common pitfalls that occur when
implementing and using an inventory optimization solution. Author
Mike Valentine detailed three of these pitfalls, and they include:
- Upfront investment, often greater if performed in-house
- Gap in skills, with either inventory planners or
IT personnel
- Employee turnover and succession planning
While the above pitfalls can be easily addressed by using an
effective outsourced vendor, there are...
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The benefits of inventory optimization can be substantial for the
right organization in terms of reducing inventory and achieving
targeted service levels. According to Lora Cecere, industry expert
for Altimeter Group, there are some challenges to overcome in order
to effectively implement such a solution. In an interview hosted by
TechTarget, Ms. Cesere described the two major challenges as:
- Inventory planning expertise - it's critical to have the
analytical skillset
- Management focus on working...
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Analytics has become an integral part of the decision-making
process in many organizations. For companies managing inventory,
the use of analytics is a necessary component of the planning
process and can be leveraged to improve business results.
Evidenced by a recent survey conducted by Accenture, they found
that high-performance manufacturing companies are five times more
likely to be using advanced analytics than their underperforming
peers. But as attractive as analytics is, there are...
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During the past two years, many supply chain innovators have been
reluctant to enhance the tools of technology they use in order to
achieve best-in-class business results. For many executives the
reason may be an aversion to risk in a volatile economic
environment, or for others there is a lack of cash available to
invest in innovative solutions despite the proven return on
investment.
Published by Aberdeen Group in October 2008, is a research brief
that lays out the technology footprint for...
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Dan Gilmore, Editor of Supply Chain Digest (www.scdigest.com),
wrote an article last month that provided a look forward for those
companies looking to innovate their supply chains in order to
advance their businesses ahead of their peers.
It almost goes without saying that many of the suggestions provided
by Dan Gilmore have been mentioned before in nearly every supply
chain related periodical. However, it never surprised me how many
organizations that have a sizable inventory investment are...
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During this great recession, many organizations were more than
eager to reduce inventory levels in order to gain a foothold on the
new normal of reduced demand in the marketplace. However the tide
is beginning to turn with the advent of more commentary about what
to do when demand does begin to return. At least that is the
position of a recent article written by Patrick Brunson, Executive
Editor of "Supply Chain Management Review." In the article, Mr.
Brunson examines the impact that increased...
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Analytics in the supply chain environment is increasingly finding
its way into conferences, articles, discussion groups and webinars.
But why? Writing for Supply Chain Management Review, editorial
director Frank Quinn attempts to answer this question in a recently
published article.
Analytics is the process of collecting, storing, and analyzing vast
amounts of data in order to support the decision-making process.
Certainly in the area of inventory, the volumes of data that
reflect the activity of...
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Excess and obsolete inventory is costing businesses hundreds of
millions of dollars in terms of time, opportunity cost, and lost
value. For those companies managing large inventory investments, it
clearly makes sense to appoint an individual or a team of experts
with responsibility of identification and disposition of this
under-performing asset.
Writing for DC Velocity, author Herb Shields supports this
strategy, "Organizations need to dedicate resources that can take
ownership of E&O and not...
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