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From The Founder

Traditional inventory systems attempt to solve the inventory management dilemma through better forecasting, improvements in the order point / order quantity process, or by adjusting safety stock levels.

However, order quantities, safety stock and lead time represent only a minority of the sources of inventory problems.

Many inventory problems are the result of Excessive demand variability, Supplier Unreliability, Inaccurate inventory tracking, Mis-aligned product to customer segments and Distorted forecasting. These factors, coupled with “traditional” inventory management systems leads to a vicious cycle, ultimately reducing sales, profit margins and customer loyalty.

To address this vicious cycle, the Organisation’s supply chain needs a system to identify and correct problems before they occur. This requires monitoring of many different genres of information – POS, shipments, orders, forecasts, forecast errors, on-hand inventory, inventory position, number of stores selling, etc. – and separating the signal from the noise to identify deviations from expected levels.

By implementing the MONITOR-DETECT-DIAGNOSE-CORRECT-COMMIT paradigm in inventory management, organisations can better orchestrate their supply chain by optimizing execution, communication, and decision-making processes – using consumer demand as the key driver. When inventory is driven by actual demand, in addition to forecast, the supply chain operates at greater efficiency and at increased profit margins.

Organisations that fail to take an agile approach to inventory management may continue to struggle with on-shelf availability, and may find that consumers (and retailers) look elsewhere for the products they want.