Smart inventory allocation and deployment starts with the right digital supply chain platform.
For most businesses, the past two years have been a much-needed teaching moment on the state of their inventory planning, tracking, and management capabilities. Decades-old, tried-and-true rules ‒ such as unit-based policies for safety stock, ABC classifications, and inventory planning based on spreadsheets ‒ are far too static, unreliable, and slow for today’s world.
Most supply chain organizations have risen to the challenge of satisfying the basic demands of lower total landed costs while maintaining customer service levels, especially when margin pressure is high. But as marketplaces grow more complex and supply variabilities increase, staying competitive requires making the right trade-offs and working with an accurate view of the end-to-end supply chain.
Inventory allocation and deployment optimization are tactics that many companies use to evaluate their supply chain trade-offs and mitigate the impact of supply variability.
A Much-Needed Transformation is Happening Now
Many companies today still rely on spreadsheets and legacy methodologies to optimize their inventories. It isn’t unusual for planners to use last-century solutions, even though meeting service levels and financial goals consistently is still a struggle.
While the gap between service levels, revenue growth, and profitability has always been a low-burning concern, recent fluctuations and disruption in global supply and demand have inflamed it into a five-alarm fire. And now, all those previously reliable practices and tools are nothing more than using a garden house when a full-fledged firehouse is needed to get the job done.
At Logility, we have seen first-hand what happens when businesses migrate away from planning inventory with error-prone Excel spreadsheets and manual, labor-intensive procurement activities and start using an integrated digital supply chain platform. Almost immediately, organizations benefit from higher visibility and process automation. For example, planning teams can focus on exceptions and value-added activities while the platform automatically releases orders into their existing ERP system ‒ leading to reduced errors and faster processing times.
Digitalization of inventory planning is highly effective because the location of inventory, not the amount produced, often makes the biggest difference. In fact, inventory allocation and deployment across multiple locations is one of the most complex and strategic decisions that can be made. And with the right solutions, supply chain organizations can seize new opportunities by detecting and understanding normally invisible interdependencies with customer response times, transportation costs, and re-deployment costs and concerns.
Access to predictive analytics and artificial intelligence (AI) makes product production, placement, and delivery more strategic, timely, and impactful. For example, Tillamook County Creamery Association was able to decrease finished good inventory by 75% while increasing fill rates by 98% and saving US$4.2 million in costs normally lost from produce spoilage and obsolescence. American apparel manufacturer Haggar experienced similar outcomes, including 70% lower excess inventory and 10% lower selling, general, and administrative expenses.
A Position of Growth Emerges from Smarter Inventory Movement
The next time you need to make a critical inventory decision, consider whether your existing systems and processes enable you to act, react, and adapt fast enough to meet actual customer demand and current market trends. Then think about how much easier and more profitable the experience could be with flexible rules, automated workflows, and enterprise-wide insights across long- and short-term planning horizons.
That’s the beauty of Logility’s solutions for inventory allocation and deployment. They use all those intelligent capabilities and more to help ensure product availability and high customer service, while efficiently managing inventory positions and directing products to channels and locations that best serve customer demand. Plus, you can keep up with the pace of today’s shifts in demand and supply by automating replenishment across all channels and forecasting at the SKU level to increase inventory turns and reduce markdowns.
Director, Product Marketing
Lachelle Buchanan is the director of product marketing at Logility, where she leverages over 15 years of experience in unifying the expertise of product development teams with the market insight of sales teams for successful new product introductions. Lachelle is most passionate about bringing teams together to solve complex supply chain challenges.