nVentic

Are you using AI, engaged in digital transformation or implementing software? (That may in some instances be the same thing!) In any case, whatever you call it, getting value from technology in core supply chain processes depends not just on the tech itself but on how you use it, what you use it for and how you train the users. Success normally starts with a clear definition of what problems or challenges you are trying to solve, then a detailed description of how the technology will help, followed by selective testing to show it works. Move fast and break things may be a valid mantra for developing new technology but it's unlikely to be an acceptable approach to your supply chain. Technology has a critical role to play in running and optimizing modern supply chains. But don't put it ahead of the problems you're trying to solve in the first place. #inventoryoptimization #supplychain #workingcapital #inventorymanagement #AI #digitaltransformation

There is more often than not a gap between theory and practice in inventory optimization and it's costing you money. Supply chain modules at university introduce a lot of essential concepts in inventory optimization, but in practice few companies are applying them as fully or as well as they could. There are a number of reasons for this: - The complexity of the models when applied to large real data sets - The inadequacy of the tools used to manage inventory day to day - Deeply embedded ways of thinking about forecasting and planning that actively work against inventory optimization Talk to nVentic if you'd like to bridge that gap. #inventoryoptimization #supplychain #workingcapital #inventorymanagement

📉 Are your inventory levels slowing down your business? 🔍 Do you find yourself constantly seeking tools and ways to improve your inventory? ✅Look no further – we've got you covered. Check our re-brand website to find all the inventory hacks, tips, and expert advice you need to keep things moving! https://nventic.com 💻 #inventoryoptimization #inventorymanagement #supplychain #inventorysoftware #advanceanalyticaltools

How do you use service levels to optimize your inventory? Service level is a critical concept for inventory optimization, with most optimization models requiring some kind of service level as a critical input to defining inventory requirements. This is where the trouble often starts, since the service levels used by different models may or may not be the service levels you use internally to measure service to customers. For instance, almost everyone uses OTIF as a measure of performance towards customers, but it isn't a measure used in inventory optimization. While two of the most common measures used for inventory optimization, fill rate and cycle service level, are not the same as OTIF. In some instances there might be an obvious correlation between OTIF and fill rate, but not always and the relationship isn't 1:1. What this means is that models or applications which call for a service level setting to function in the first place frequently don't deliver optimal results. Not because the models themselves aren't good, but because it isn't so simple for those using them to know what service level to set. Depending on the measure used, very different service levels might be appropriate for different items. This is a blind spot for many supply chain teams. Are you getting all that you should out of your service levels? #inventoryoptimization #inventorymanagement #supplychain #servicelevels #kpis #workingcapital

How good at inventory optimization can you get? That may seem an odd question. How about "how close to optimal are your inventories?" That's not the same question. Strangely, most supply chain managers are perhaps more comfortable with the first question than the second. Supply chain is difficult. Things are changing all the time. You're putting all your efforts into keeping inventories in balance and most of the time the rest of the organisation is fairly happy with them. So you're doing a good job, right? You may well be. But actually, without knowing how close to optimal your inventories really are, it's very hard to say. We commissioned some research some months back that showed no obvious correlation between how good organisations thought they were at inventory optimization and objective measures of inventory performance (link in the comments below). If you really want to know how good you are, best start by calculating how close to optimal your inventories are. #inventoryoptimization #supplychain #workingcapital #inventorymanagement

“Technology can help companies address the challenges they face in managing sustainability by providing visibility into the supply chain, reducing environmental and social issues”. According to Supply & Demand Chain Executive, managing data effectively remains one of the biggest obstacles companies face in their sustainability efforts. The publication emphasises that to successfully integrate sustainability into supply chain operations, companies must implement interconnected systems that align technology with sustainability goals. Additionally, this week: SupplyChainBrain highlights the importance of succession planning in retaining supply chain expertise. Promoting from within is a powerful strategy for creating a positive work environment, retaining talent, and ensuring organisational continuity. Supply Chain Digital reports on a new survey by Gartner, which found that 76% of logistics transformation attempts fail to fully succeed, often missing critical budget, timeline, or KPI metrics. Forbes discusses the significance of implementing end-to-end supply chain technology to enhance overall efficiency and effectiveness. Read the full articles below. #SupplyChainSustainability #SupplyChainTechnology #InventoryOptimization #KPI #InventoryManagement 

What does good look when it comes to inventory levels? This has an obvious and banal answer: not too little and not too much. But if you want a concrete and precise answer, it's not so obvious. If you imagine, as a starting point, the classic sawtooth model: at any point during the cycle your inventory should be somewhere between max (safety stock EOQ) and zero. Note the bottom end goes to zero: the point of safety stock is to buffer variability, so you should dip into it on average in half of all cycles. Technically, you might even have somewhat more than max, for cycles where demand is lower than average over the lead time. In other words, considered at a single item level, "optimum" could be anywhere in quite a wide range. Only inventory at zero, or significantly over the max, could be considered bad or wrong. Although even here there might be seasonal effects (building inventory ahead of the holidays) or particular contingency considerations. Note, furthermore, that the sawtooth model as described above only really applies to replenishment planning. Deterministic planning should, at least in theory, not need safety stock. Because so many people use deterministic planning to manage unknown demand, they tend to have some safety stock anyway, but already at this point max calculations become questionable. Given the foregoing, it is perhaps no wonder that most organisations struggle to know how close to optimal their inventories really are. Best demonstrated practice or external benchmarks become the only way of assessing performance. However, while "optimal" inventory levels fit within a quite wide range at an individual item level, once you start aggregating data a more useful view emerges. While individual items could be anywhere along the sawtooth at any given moment in time, on average all items should tend towards the middle, i.e. safety stock EOQ/2. This is a simplified and short overview, but understanding where your middle point is and where your max is and comparing inventory levels to them over time is a great way not only to understand what good looks like, but also to work your way closer to it. #inventoryoptimization #inventorymanagement #supplychain #workingcapital

How political is inventory management? The answer is, deceptively high! (We're talking about company politics here, the picture notwithstanding.) In theory, inventory management is carried out by supply chain teams, using planning tools, optimization models, and so on. In reality, however, things are not necessarily so straightforward. Let's start with the bane of many a planner: the forecast. The normal process is that a forecast is produced, then a decision is made what to do with it. Do you just plan to the forecast? Do you consider a likely range of scenarios based on expected forecast accuracy? Who takes the final decision on how it is used? By now we are, whether implicitly or explicitly, in the realm of S&OP, which however well it is done is also subject to political pressures: are we going with the optimistic or the pessimistic scenario? There is also a question of accountability. Frequently, planners are required to plan to a forecast and do so in the full knowledge that the forecast has bias. Their job is to plan to the forecast, not to challenge it. It is less important that things are sub-optimal than that blame can be averted. This is not to criticise the planners, this is a question of corporate culture. And there is also the very real issue of competing metrics. While there is often general encouragement to keep inventories in balance, it is possible to improve metrics like production efficiency by ignoring, wilfully or otherwise, the true holding cost of inventory. Once this way of thinking has become embedded, it is very hard to challenge. Often, these corporate pressures are just perceived as fixed constraints that have to be worked with, and it is certainly not easy to challenge such well-accepted views, but they certainly have a major impact on your actual inventory performance. #inventoryoptimization #inventorymanagement #supplychain #workingcapital

Do you need more inventory? Almost certainly yes. And no. Inventory optimization is too often used as a euphemism for inventory reduction. And inventory reduction is too often perceived as risking increased shortages. However, the empirical data suggests that companies which struggle with shortages frequently have high overall inventory levels, while many companies with lean inventories don't necessarily have more shortages. The reality is that well managed supply chains maintain inventories at levels that avoid shortages and excesses simultaneously. Manufacturing capacity, working capital, even warehouse space, are not unlimited resources, so overproducing unneeded inventory can and does create shortages of needed inventory. So by all means increase your inventory. Just make sure it's the right inventory. And a good way of doing that might be by reducing your (unneeded) inventory. Welcome to inventory optimization. #inventoryoptimization #inventorymanagement #supplychain #workingcapital

How much inventory waste are you generating? Newspapers are a classic example of inventory waste: either you sell them today or they go to waste. Your chances of either stocking out or being left with obsolete stock are high. This has its own statistical model - the newsvendor model - to maximise profit. Most manufactured goods don't have such a very short shelf life, but even goods with the longest shelf lives often end up obsolete as tastes change, markets move on, or just because forecasts were so far from reality. Depending on the industry, anywhere between 1% and 10% of inventory scrapped each year is not unusual. For many, this is just a cost of doing business. You will rarely have perfect foresight of future inventory requirements, so some will go to waste. As long as the overall operation is still profitable, that's not a problem. So much is true, to an extent. But that is not to say that current levels of scrap are as low as they could or should be. Unless your shelf life is measured in days, obsolescence is rarely inevitable, but reflects the decisions that were made that influenced inventory. Are you doing all you can to avoid inventory obsolescence? #inventoryoptimization #inventorymanagement #supplychain #workingcapital