Inventory Optimization Software Applied to the Manufacturing Supply Chain

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SmartOps inventory optimization solutions allow manufacturers to determine how much inventory of each component and finished product should be kept at any stage in the supply chain for optimal availability to dealers and customers, and at lowest total cost to the business.

Lean Manufacturing and Six Sigma Initiatives Need More Support SmartOps offers a solution for Six Sigma teams to identify the biggest drivers of waste and inventory in the system, so that they can prioritize areas of improvement. In addition, Lean Manufacturers can benefit from minimizing inventory across the total supply chain -- not just within the plant walls.

Industrial Manufacturers continue to struggle with finding the optimal inventory placement across their global supply chains to drive a significant reduction in operating costs. Lean manufacturing initiatives may have done well to push inventory out of the plant, but often those inventory costs move elsewhere -- to suppliers or to finished goods, or in some cases to excess logistics costs -- rather than reducing overall inventory investments. The implementations of ERP and supply chain planning systems, while beneficial in other areas, have not been successful in increasing total chain inventory turns.

Further complicating matters for this industry are: complex bills of materials; the need to model and plan for slow versus fast-moving parts; optimizing inventory targets in the presence of capacity excesses or constraints; entrance into new markets and competition to be the best in meeting demand; Just-in-Time initiatives; increased outsourcing of parts; multiple suppliers and variability in lead times; shrinking product margins; and many other issues.

There Is Inherent Uncertainty in Supply and Demand

Uncertainties, disruptions, and variances in data over time make it extremely hard for planners to decide with confidence how many days (or hours) of inventory of each component or end-item to keep at any point in the chain at any time to stabilize product availability and improve service levels. As a result, planners and managers could rely on excess safety stock to buffer against supply constraints, lead time variability, capacity uncertainty, and forecast errors.

What has been missing from existing planning solutions and from internal approaches is a comprehensive, analytical view of the global supply chain that accounts for inherent uncertainty to continuously determine optimal target inventory positions.

SmartOps Multistage Inventory Planning & Optimization (MIPO^TM) 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

SmartOps inventory optimization algorithms manage uncertainties in the data and offer visibility into the drivers of inventory at the item-location-time period level of detail. SmartOps is able to do that because it looks at the right granularity of data to adequately manage safety stock levels and understand where the biggest ongoing opportunities for improvement are within their supply chains.

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