"With SmartOps, we can update important operating targets such as safety stocks more frequently and at a more granular level. Now we're able to more closely align our inventory deployment with what is actually expected by our customers in a dynamic environment."
Rich Dregne
Sr. Director of Product Availability
Kellogg Company
|
 Consumer Goods
Inventory Optimization Solutions to Improve Your Bottom Line
SmartOps calculates how much inventory of each item you should carry, why, where, and when -- and what drives the need for inventory in the supply chain.
Consumer packaged goods (CPG) manufacturers have been struggling to drive operating income growth over the past several years amid a variety of industry pressures and planning system shortcomings. A central strategy to improving returns on invested capital and freeing up cash involves reducing and optimizing the deployment of inventories at lowest risk to the business. Unfortunately, optimization of inventory plans has been historically difficult for many companies due to lack of an appropriate solution.
Because SmartOps lets companies calculate and understand how much inventory they should carry, why, where, and when, consumer goods manufacturers can achieve step-change improvements in supply chain performance by addressing common challenges:
CPG Planners: "Whatever you do, don't lose the sale."
Commonly experienced in a CPG environment: Marketing believes that an increase in inventory will ensure customer service targets are met without fail, but finance, operations, and other groups seek to decrease working capital and suggest slashing inventory as a way to achieve that goal. Planners are left to determine: Should inventory be cut, and where, by how much, and when? SmartOps MIPOTM allows executives and planners to clearly understand the right amount of inventory to meet customer service levels, factoring in all of the associated costs.
CPG Companies Have Complex, Multistage Supply Chains
Having different product supply chains -- each with some mix of raw materials, production, assembly, postponement, packaging, and distribution stages -- makes it difficult to optimize "total chain" inventory on a continuous basis. SmartOps MIPO uses a multistage modeling approach that considers and calculates the relationships among inventories, service levels, capacity, and costs across all stocking locations and stages/echelons.
CPG Companies Must Cope with Inherent Uncertainties in Supply and Demand
Uncertainties, disruptions, and variances in forecasts, lead times, and capacity over time make it extremely hard for planners to decide with confidence how much inventory of each item should be kept at any point in the chain at any time. To do so, one must look at a very granular level of data to adequately manage safety stock levels and other purposes for carrying inventory. The SmartOps stochastic process engine uses advanced algorithms to account for uncertainties in the data and offer visibility into the drivers of inventory at the item-location-time period level of detail.
Capacity Constraints Should Be Considered in Inventory Planning
For many companies, capacity constraints might mean that certain product lines with periods of high demand require inventory to be pre-built. Such constraints could also require similar products within a supply chain to be run in sequence due to production changeover costs. When determining optimal target inventory positions, SmartOps MIPO segments inventory into the purposes for which it is needed, including safety, cycle, in-transit, pre-build, and merchandising stock requirements. To accomplish that, SmartOps coordinates capacity, inventory, demand, lead time, and product availability variables -- making MIPO the most robust inventory optimization solution on the marketplace.
SmartOps Multistage Inventory Planning & Optimization (MIPOTM) is an advanced software solution for optimizing total chain inventory targets to meet desired customer service/product availability targets, while accounting for capacity constraints, multistage interdependencies, and supply and demand variability.
MIPO fills a persistent gap in the supply chain planning landscape by generating improved inventory targets:
- Across all components and end-items/finished goods
- For all locations
- For each time period
- For the reasons you might need to carry inventory (safety stock, cycle stock, pre-build inventory, in-transit/pipeline stock, merchandising/dealer stock)
- That provide better inputs into existing systems and processes
|
