Our approach to inventory optimisation is that it should be asset to the business by being capable of generating both revenue and savings. This is where Multi-Echelon Inventory Optimisation comes in to play and why we utilise this market leading aspect of the ToolsGroup SO99+ offering.
Managing inventory to drive revenue
Traditional inventory approaches have serious limitations and can cause major challenges for a business through there inability to understand, in depth, rapidly changing demand patterns and the influences affecting consumer purchasing.
Our Multi-Echelon Inventory Optimisation (MEIO) routinely generates million dollar ROIs via increased service levels, reduced stock-outs and improved inventory turns. This unparalleled effectiveness is the result of unique demand and inventory modelling technology and its proprietary analytical relationships between inventory levels and customer service have proven to be highly reliable, even for very slow moving and intermittent demand items. This allows ToolsGroup SO99+ to optimise even very large assortments, including products in the “long tail”.
Typical inventory “segmentation” approaches, often incorrectly labeled “inventory optimisation”, group SKU-Locations (SKU-L) into arbitrary “segments” and then apply “one size fits all” logic by assigning all SKU-L's within the segment the same service level target. This can lead to poor recommendations and inventory optimisation. ToolsGroup SO99+ automatically assigns a different service target to each individual SKU-L, thereby achieving the target global service level while simultaneously delivering the mathematical optimum for the objective function chosen - be that minimum inventory investment, minimum storage space, maximum net margin, minimum obsolescence, maximum freshness etc.
ToolsGroup SO99+ effectively optimises complex supply chains, including multiple distribution and manufacturing echelons. It can automatically suggest the right “decoupling points” and the adequate levels of materials, components, sub-assemblies and finished goods in any location of the entire supply chain by optimising the balance of inventories across different locations, optimal staging, and different Bill-of-Material (BOM) levels (optimal postponement).
From a user perspective the benefits are significant because ToolsGroup SO99+ uses its considerable power and sophisticated technology in a highly automated way that frees up time from manual tasks for strategic planning and decision-making.
