Inventory Optimization
These include maximizing factors such as productivity, strength, reliability, longevity, efficiency, and utilization.

What is Inventory Optimization?

Why do you need this inventory in your supply network? The obvious answer is to protect against uncertainty. It is the enemy of every well-run supply chain. Even automobile companies, today have started planning with MTS (Make to Stock) scenarios for their best selling models. While you can’t eliminate all this factor, you can protect yourself against the uncertainty it brings. This insurance comes at a cost, hence the pallets of fund sitting in those warehouses. Identifying the specific locations and products to store inventory to protect against the volatility is the trick, and that is where IBP inventory optimization comes real handy.

IBP inventory optimization module provides a platform to identify, model and simulate different situations. This helps in achieving a tactical balance for your supply chain efficiency rather than a levered approach for improvements. If you know exactly which factors influence the movement on inventory, you can go after those pain points and focus inventory built up where it makes the most sense.

The purpose of optimization is to achieve the “best” design relative to a set of prioritized criteria or constraints. These include maximizing factors such as productivity, strength, reliability, longevity, efficiency, and utilization.

optimization dramatically improves the financial performance of an inventory because buying and stocking are more in-line with expected customer demand. It helps to reduce and almost eliminate the future build-up of excess inventory and dead stock.

Optimizing your inventory means that you will determine exactly how much you need to order of every single SKU and when you need to order it to always be able to serve your customers. Inventory optimization takes seasonality and campaigns into account as well as supplier lead times and schedules. This way you will always have the right products in the right warehouse without tying up too much capital in inventory. This blog post will briefly go through the key elements of optimizing your inventory and link to resources that will give you more details of each key concept:

Why is Inventory Optimization important?

Optimization dramatically improves the financial performance of an inventory because buying and stocking are more in-line with expected customer demand. It helps to reduce and almost eliminate the future build-up of excess inventory and dead stock.

Benefit of Inventory Optimization important

Seven advantages of implementing integrated demand and supply management

Maximize inventory efficiency by reducing working capital

Improved speed and agility to plan

Decreased production and distribution costs

Harmonized process and optimal collaboration

Address cross-functional and critical business decisions

Alignment and integration of planning and execution

Improved decision making throughout the entire supply chain

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