Business Automation and Software Blog

Demystifying Inventory Optimization

Posted by Robert Baran on Wed, Apr 24, 2019 @ 11:00 AM

Did you know that if you don’t have a comprehensive picture of the mechanics of inventory optimization, you could end up with a sizable amount of wasted effort? Inventory optimization is a delicate balance between maintaining the minimum cost of inventory while keeping the desired fill rates for optimized items with the least cost reorder frequency and using technology to establish predictive control over inventory performance. All that? It’s no wonder that efforts are often diverted from one effort to another.

In manufacturing, as much as half of your capital can be tied up in inventory. This means it’s crucial to find the right inventory optimization balance. Fortunately, SYSPRO’s inventory optimization solutions empower your team to solve these challenges. Forecast and control over what’s in transit, at the warehouse, and on the shop floor so you can identify issues before they occur. The payoff can be significant:

  • Improve stock availability and avoid out of stocks
  • Increase inventory turnover and shrink obsolete stock
  • Reduce carrying costs to boost profit and free up capital

If you’re serious about finding ways to streamline your inventory operations, here are some keys to success.

More Accurate Forecast Demand

For optimal business success, it’s important to purchase raw materials wisely, considering issues like seasonality and favorable purchasing terms. SYSPRO ERP Software provides advanced forecasting, demand planning, and modeling with “what-if” capabilities that show the trade-offs related to inventory and fulfillment time.

In addition, SYSPRO enables you to conduct an analysis of stock codes (SKUs) by multiple algorithms at a granular level. This lets you see each item’s historical demand behavior and impact on profits. From there, you can create segments and balance ordering based on that behavior: basic, seasonal, or safety stock.

Don’t have item history? SYSPRO’s proxy functionality enables you to forecast demand for new products based on the sales history of similar superseded products. This is particularly useful in industries where product life cycles are short.

Improve Sales and Operations Planning

Using SYSPRO’s integrated scheduling, inventory forecasting and Materials Requirements Planning (MRP) solutions, you can make sure to order only what you need in response to demand, reducing both costs and waste. This functionality is complemented by features such as “available-to-promise” and various time fence indicators, giving sales and production staff a reliable view of what they can promise to customers and when.

In addition, SYSPRO ERP software features advanced business intelligence reporting so you can analyze KPIs such as lost sales, days of stock cover, and days out of stock. Once you identify slow-moving, excess, active and static stocks, your sales team can create targeted promotions, and the operations team can accurately handle obsolescence provisioning.

Budgets and Inventory Targets to Drive Efficiency

If you connect SYSPRO Inventory Optimization to an MRP solution, your team can use demand forecasting to calculate budgets and targets for purchasing raw materials. Develop ordering policies by stock code at the warehouse level, then dynamically calculate time-phased minimum and maximum levels based on demand forecasts. With set targets, you can further improve efficiency by automating processes like standard reorders.

Rapid Troubleshooting for Daily Inventory Gaps

With real-time access to inventory information, it’s much easier to pinpoint and address issues quickly before an out-of-stock situation occurs. SYSPRO ERP software can show you where and why there is inventory excess or shortage, with tracking signals to indicate when forecast accuracy might be in doubt. You can also leverage alerts to automatically notify you of supplier issues in order to speed up resolution.

PositiveVision and SYSPRO for Inventory Optimization

Accurate forecasting and planning become even more challenging once your business starts growing in complexity with multiple sales channels or even global locations, and mission critical to driving profits. Don’t let your focus on inventory optimization become unbalanced. PositiveVision is committed to helping you keep your business objectives in sight at all times, which means a clear view into your inventory. As a certified SYSPRO distributor, PositiveVision can help ensure your SYSPRO installation fits your needs right now and scales with you as you grow. Let us help you keep an eye on your inventory and position your company for optimization success. Find out how today.

Topics: inventory optimization