Objectives

The analysis assists your company in reducing excess inventory levels by improving inventory turnover rates, adjusting individual product safety stock quantities while maintaining on-time delivery schedules and controlling stock-outs.

Results from the analysis can be used by management to meet its inventory level objectives in a declining sales environment. The following graph illustrates the results from one of these types of analyses.

Analysis and Financial Data

The following indicators and tests are applied to solve the inventory issues:

• Sources of demand information include sales forecast, future orders, order back-logs, etc.
• Limiting factors such as material availability, production constraints, delivery issues, etc. are also taken into account.
• Accuracy of past forecasts is measured to isolate possible areas of improvement.
• The right event data out of the vast stream of data is identified and used to build the best fitting forecast model (at the SKU level, at a partner level, etc.).
• Models continuously monitor demand pattern changes and update forecasts used to plan stock replenishment and to maintain the appropriate inventory levels.
• Forecast errors and knowledge of desired service levels are used to better manage high and low-end inventory risks.

Benefits

The benefits that can be realized from utilizing this solution:

• Isolate the information and models to controlling inventory levels, forecasting demand and replenishing stock effectively.
• Reduce excess inventory enables your company to free up cash which is vital for the company’s on-going survival.