Inventory Optimization: A Business Case
Inventory optimization (IO) technology has increasingly become an important tool to aid manufacturers in either managing overall supply chain inventories more efficiently or supporting decision-making processes with "what if" quantifications for certain business decisions.
This technology has moved beyond its previous "black-box" perceptions and has increasingly been adopted and deployed by leading-edge companies. Some software vendors persist in taking a "build it and they will come" approach to applications and technology, but not with IO.
The majority of IO offerings in the current market have been built around unique optimization algorithms, and each will yield a different result. It is therefore important for prospective buyers to do their homework in understanding the inventory or business planning problem needing to be addressed.
Deployment of this application usually includes two types of approaches. In an interactive attended deployment, information inputs and outputs are depicted in the actual IO tool, and planners interact with the application to obtain inventory targets or perform analysis. In an automated deployment, the IO application sits in the background, with automated feeds of inventory or safety stock targets sent directly to the designated advanced planning system.
A recent Manufacturing Insights survey of existing deployments among manufacturers indicates that the ROI for this technology can be significant and meaningful. Usability across vendor offerings is improving, helping in more rapid adoption. Deeper functionality, broader integration with supply chain network design, demand-aware supply management as well as planning workbenches have helped in adoption and user acceptance levels for the technology. Deployment can be accomplished in four to six months for initial managed scope deployments, facilitating inventory and other benefits for the business in less than a year.
Click here to read this story in its entirety.
This technology has moved beyond its previous "black-box" perceptions and has increasingly been adopted and deployed by leading-edge companies. Some software vendors persist in taking a "build it and they will come" approach to applications and technology, but not with IO.
The majority of IO offerings in the current market have been built around unique optimization algorithms, and each will yield a different result. It is therefore important for prospective buyers to do their homework in understanding the inventory or business planning problem needing to be addressed.
Deployment of this application usually includes two types of approaches. In an interactive attended deployment, information inputs and outputs are depicted in the actual IO tool, and planners interact with the application to obtain inventory targets or perform analysis. In an automated deployment, the IO application sits in the background, with automated feeds of inventory or safety stock targets sent directly to the designated advanced planning system.
A recent Manufacturing Insights survey of existing deployments among manufacturers indicates that the ROI for this technology can be significant and meaningful. Usability across vendor offerings is improving, helping in more rapid adoption. Deeper functionality, broader integration with supply chain network design, demand-aware supply management as well as planning workbenches have helped in adoption and user acceptance levels for the technology. Deployment can be accomplished in four to six months for initial managed scope deployments, facilitating inventory and other benefits for the business in less than a year.
Click here to read this story in its entirety.