Inventory Optimisation
27/03/2012
Inventory optimisation (IO) can really help a company to increase business profits. Practical supply chain solutions like this result in reduced product inventories, meaning greater profits and more satisfied end customers.
IO used to be more of a mathematical theory, developed and discussed in the university classroom as a possible solution for improving logistics. It was a theoretical approach to mapping supply and demand patterns across a multi-level supply chain.
The theory has these days become a usable tool to quantify and help improve corporate profit margins in the supply chain. IO is a practical process that helps to reduce stock inventory, which in turn frees up capital yet doesn’t have to impact negatively on service levels.
Companies that implement inventory optimisation often see a significant total inventory reduction. The great news for the business world is that the basics of supply and demand are common to all supply chain situations, which means they can apply to every industry in the world.
IO can be applied to the supply chain of moderately sized as well as large corporate organisations selling a wide range of products or offering a wide range of services.
Software is now available that automatically provides solutions and solves inventory optimisation problems across supply chains. This sofware can be used for complex global networks that bring together supply chains across large multi-national companies.
Logistically this is great news for businesses because they can more accurately control supply and demand, meaning they don’t under or over order stock or unnecessarily waste money.
Gideon Hillman are expert supply chain and logistics consultants. They offer fantastic solutions for inventory optimisation, providing inventory management software and advice to ensure that a company’s supply chain is optimised and cost effective. Visit the Gideon Hillman website to find out more.
