There are unavoidable tradeoffs between inventory cost and item availability. The Smart Inventory Optimization (SIO) app calculates all the key metrics to expose those tradeoffs. You can try “what-if” experiments such as “What happens to shortage cost if we raise the reorder point from 5 to 10?”. Better yet, you can let SIO find the optimal operating policy, e.g., the lowest cost combination of reorder point and order quantity that guarantees a 95% service level.
Related Posts
Forecast-Based Inventory Management for Better Planning
Forecast-based inventory management, or MRP (Material Requirements Planning) logic, is a forward-planning method that helps businesses meet demand without overstocking or understocking. By anticipating demand and adjusting inventory levels, it maintains a balance between meeting customer needs and minimizing excess inventory costs. This approach optimizes operations, reduces waste, and enhances customer satisfaction.
Make AI-Driven Inventory Optimization an Ally for Your Organization
In this blog, we will explore how organizations can achieve exceptional efficiency and accuracy with AI-driven inventory optimization. Traditional inventory management methods often fall short due to their reactive nature and reliance on manual processes. Maintaining optimal inventory levels is fundamental for meeting customer demand while minimizing costs. The introduction of AI-driven inventory optimization can significantly reduce the burden of manual processes, providing relief to supply chain managers from tedious tasks.
The Importance of Clear Service Level Definitions in Inventory Management
Inventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making.
Recent Posts
Forecast-Based Inventory Management for Better PlanningForecast-based inventory management, or MRP (Material Requirements Planning) logic, is a forward-planning method that helps businesses meet demand without overstocking or understocking. By anticipating demand and adjusting inventory levels, it maintains a balance between meeting customer needs and minimizing excess inventory costs. This approach optimizes operations, reduces waste, and enhances customer satisfaction. […]
Make AI-Driven Inventory Optimization an Ally for Your OrganizationIn this blog, we will explore how organizations can achieve exceptional efficiency and accuracy with AI-driven inventory optimization. Traditional inventory management methods often fall short due to their reactive nature and reliance on manual processes. Maintaining optimal inventory levels is fundamental for meeting customer demand while minimizing costs. The introduction of AI-driven inventory optimization can significantly reduce the burden of manual processes, providing relief to supply chain managers from tedious tasks. […]
The Importance of Clear Service Level Definitions in Inventory ManagementInventory optimization software that supports what-if analysis will expose the tradeoff of stockouts vs. excess costs of varying service level targets. But first it is important to identify how “service levels” is interpreted, measured, and reported. This will avoid miscommunication and the false sense of security that can develop when less stringent definitions are used. Clearly defining how service level is calculated puts all stakeholders on the same page. This facilitates better decision-making. […]
Future-Proofing Utilities: Advanced Analytics for Supply Chain OptimizationUtilities in the electrical, natural gas, urban water, and telecommunications fields are all asset-intensive and reliant on physical infrastructure that must be properly maintained, updated, and upgraded over time. Maximizing asset uptime and the reliability of physical infrastructure demands effective inventory management, spare parts forecasting, and supplier management. A utility that executes these processes effectively will outperform its peers, provide better returns for its investors and higher service levels for its customers, while reducing its environmental impact. […]
The Cost of Spreadsheet PlanningCompanies that depend on spreadsheets for demand planning, forecasting, and inventory management are often constrained by the spreadsheet’s inherent limitations. This post examines the drawbacks of traditional inventory management approaches caused by spreadsheets and their associated costs, contrasting these with the significant benefits gained from embracing state-of-the-art planning technologies. […]
Inventory Optimization for Manufacturers, Distributors, and MRO
- Future-Proofing Utilities: Advanced Analytics for Supply Chain OptimizationUtilities in the electrical, natural gas, urban water, and telecommunications fields are all asset-intensive and reliant on physical infrastructure that must be properly maintained, updated, and upgraded over time. Maximizing asset uptime and the reliability of physical infrastructure demands effective inventory management, spare parts forecasting, and supplier management. A utility that executes these processes effectively will outperform its peers, provide better returns for its investors and higher service levels for its customers, while reducing its environmental impact. […]
Centering Act: Spare Parts Timing, Pricing, and ReliabilityIn this article, we'll walk you through the process of crafting a spare parts inventory plan that prioritizes availability metrics such as service levels and fill rates while ensuring cost efficiency. We'll focus on an approach to inventory planning called Service Level-Driven Inventory Optimization. Next, we'll discuss how to determine what parts you should include in your inventory and those that might not be necessary. Lastly, we'll explore ways to enhance your service-level-driven inventory plan consistently. […]
Why MRO Businesses Need Add-on Service Parts Planning & Inventory SoftwareMRO organizations exist in a wide range of industries, including public transit, electrical utilities, wastewater, hydro power, aviation, and mining. To get their work done, MRO professionals use Enterprise Asset Management (EAM) and Enterprise Resource Planning (ERP) systems. These systems are designed to do a lot of jobs. Given their features, cost, and extensive implementation requirements, there is an assumption that EAM and ERP systems can do it all. In this post, we summarize the need for add-on software that addresses specialized analytics for inventory optimization, forecasting, and service parts planning. […]
5 Steps to Improve the Financial Impact of Spare Parts PlanningIn today’s competitive business landscape, companies are constantly seeking ways to improve their operational efficiency and drive increased revenue. Optimizing service parts management is an often-overlooked aspect that can have a significant financial impact. Companies can improve overall efficiency and generate significant financial returns by effectively managing spare parts inventory. This article will explore the economic implications of optimized service parts management and how investing in Inventory Optimization and Demand Planning Software can provide a competitive advantage. […]