Inventory Optimisation

Business inventory takes many forms, whether it be finished goods, work-in-progress, raw materials or spares parts.

Inventory is required for two main purposes:

  • To respond to a temporary lack of supplying capacity, to supply the demand (such as during peak season when the production capacity could be lower than the demand, requiring inventory to be built upfront)
  • To deal with uncertainties and fluctuations – upstream, downstream or internal.

Inventory optimisation refers to having the correct amount of inventory, of the right products or materials, in the right place and at the right time, so to achieve the service level required. The trade-off between the total cost of inventory and the resulting service level, as well as its resulting impact on the company´s profit needs to be understood.

We have developed an Inventory Optimisation methodology that combines the operating, planning and cost elements of the system. Key aspects required for inventory optimisation typically include:

  • Improving the forecasting methodology
  • Improving the planning process
  • Reducing internal and external uncertainty factors
  • Data-driven inventory optimization modelling
  • Simulation of the system to evaluate the expected service level

As with the other optimisation systems, the system allows the running of multiple scenarios to analyse the networks sensitivity and risks, as well as looking for new business opportunities to reduce costs.