Video Podcast: Five Core Competencies of Inventory Optimization

A key characteristic of best-in-class companies is their success in using inventory optimization (IO) and cash management techniques to free up working capital. The amount of a company’s working capital trapped in inventory can be expressed as days inventory outstanding (DIO). As DIO rises due to factors such as slower sales, longer supply chains, SKU proliferation, and higher obsolescence, return on capital employed drops, which can hamper a company’s ability to compete, especially when financing is hard to come by.

To combat these and other supply chain challenges, operations research experts developed a discipline called Inventory Optimization about a decade ago. Early adopters realized hundreds of millions of dollars in documented savings through smarter inventory reductions without sacrificing sales revenue or missing customer commitments. Other supply chains took notice and IO began its evolution from an algorithm-driven point analysis to a spectrum of integrated best practices.

The following video podcast provides a discussion on five of the best practices we have identified. The 10 minute video features Logility’s Chris Russel and interviews Dr. David Anderson, former head of the supply chain practice at Accenture.