Seven Easy Estimates Reveal What to Expect from Inventory Optimization


The first step toward successful inventory optimization is getting your internal conversation on the right track by assessing your current supply chain demand planning situation, understanding the potential benefits, and setting your expectations with confidence.

The benefits of multi-echelon inventory optimization (MEIO) have been well established by hundreds of companies of all sizes in industries ranging from consumer products to life sciences, high technology to process and discrete manufacturing. Leading organizations have shown that right-sizing inventory buffers and restructuring where and how inventory is held drives powerful financial benefits and adds tremendous value to the sales, inventory and operations planning (SIOP) process. MEIO provides a knowledge platform for better decision making and lets organizations use inventory as a lever for balancing supply and demand.

Multi-echelon inventory optimization (MEIO) right-sizes buffers and recommends where inventory should be held across all tiers of the supply chain. The benefits of multi-echelon inventory optimization are well established, including reducing inventory while simultaneously raising service levels, resulting in dramatically improved profitability and happier customers. However, some supply chain demand planning teams may need help with the initial internal MEIO conversation.

Supply chain managers seeking to assess the potential financial benefits of an MEIO initiative can start with the high-level process outlined in this white paper. Based on Logility s years of experience, this paper presents a good way to get the ball rolling, with seven simple estimates that help explore the impact an MEIO initiative can have on your organization. This white paper provides some practical guidance on how to have a conversation about MEIO and supply chain demand planning, including helping team members across different departments understand the potential impact on inventory reduction, increased working capital, savings from lower obsolescence, and more.

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