Inventory strategies begin with an efficient network design to effectively balance your ability to accurately predict customer demand and work with suppliers to adjust orders in real time. Traditionally manual processes can make this take nearly impossible – making the use of AI-embedded supply chain technology a high priority for companies across all markets, industries, and sizes.
According to Mark Balte, executive vice president of Supply Chain Innovation at Logility, the growing popularity of intelligent digitalization is only part of the story. Instead, supply chain leaders indicate a readiness to pursue a dramatic shift in how their organizations operate.
“Routine firefighting of inventory issues is a symptom of inventory strategies treated as a once-a-year exercise. However, inventory strategies need much more attention to drive true value realization across the business,” Balte forewarns. “When striving for resiliency, supply chain organizations need to review inventory strategies monthly from an optimization and network design perspective and as part of their overall sales and operations planning [S&OP] process.”
Balte’s view emphasizes a critical (and often-forgotten) best practice when undergoing a digital transformation of supply chain operation. While there are many software vendors to consider, it is essential to pick one that supports supply chain blueprinting to strengthen the foundation of existing systems. During times of constant change, this approach creates more flexibility to adopt modern technologies and stability to evaluate inventory strategies without disruption.
A calculated approach to inventory management
Recent complications in inventory management are compelling business leaders to learn as much as they can about their competitors’ strategies and best practices. They want to know the trends, tools, and lessons learned that could be incorporated into their inventory strategies.
While searching elsewhere for answers, business leaders must allocate more time and resources to effectively focus on their existing strategy. Leaders will see that old processes and outdated technologies bring responses to supply chain challenges that struggle to keep up with change. Therefore, a more calculated approach to transforming inventory management is necessary – namely, supply chain blueprinting.
Ron Boschert, senior vice president of Consulting Services for Logility, compares the urgency of supply chain blueprinting to building a house. “When building a house, everyone – from the architect and the contractor to the government inspector and homeowner – demands the right foundation is in place,” he explains. “But that’s not all – they also desire a layout that’s the right size for the homeowner’s family and provides the promised value of living in this house.”
From the view of the supply chain technology infrastructure, companies should inform the blueprint based on everything from the size of the supply chain operation to process deficiencies. This includes assessing the needs of the internal workforce; all tiers of external suppliers, vendors, partners, and customers. More importantly, opportunities should be identified to improve demand optimization, forecast accuracy, multi-echelon planning, hierarchical collaboration, and process automation.
For many Logility customers worldwide, such a supply chain blueprint has significantly optimized their network design while ensuring customers experience little to no impact on service and prices. For example, Tillamook County Creamery Association increased its forecast accuracy from 70%–80% to 85% and saved US$4.2 million of its revenue from inventory spoilage and obsolescence.
Supply chain transformation starts with a clear blueprint
There are many trends in supply chain management. AI and machine learning—embedded analytics, inventory parameters, load optimization, economic goods movement, inventory rebalancing, scenario planning, stochastic and deterministic planning, postponement strategies for components, pull-in client use cases – the list goes on and on.
Ultimately, supply chains need structure to withstand one-time and repetitive disruptions. That structure comes from a blueprint that helps ensure inventory optimizations and network design processes move strategically on a regular cadence to keep up with inevitable changes.
Get an in-depth look at how businesses are navigating the latest industry trends and applying inventory strategies to make the best decisions better with supply chain technology. Watch our on-demand webinar, “Supply Chain Reset: Best Practices in Evaluating Inventory Strategies.“