Competencies
Competencies Supply Chain Management Inventory Optimisation
Inventory Optimisation: Low Inventories, High Delivery Reliability
The SCM executives of today are often faced by contrary demands: on the one hand, their sales and marketing colleagues expect almost 100% delivery reliability, whilst on the other their finance departments are striving to reduce working capital by maintaining the lowest total inventories possible. This results in conflicting objectives, as a high service level is to be ensured despite low inventories.
The first step towards achieving these twin goals is to increase transparency using a cross-network, key performance indicatorbased management system. This includes the determination of specific supply chain characteristics, which are then applied as a segmenting criterion. This facilitates the identification and utilisation of the drivers, parameters and dependencies which have an influence on inventory levels.
Drivers for working capital reduction
The aim here is to use an appropriate mix of drivers to achieve reductions in both the working capital tied into inventories and any related costs.
- Planning process optimisation can bring about significant increases in process reliability and therefore help to avoid stockouts.
- Process-focussed and tool-supported (e.g. SAP EIO) inventory parameter optimisation sets planning parameters (and therefore also safety stocks, cycle stocks, etc.) to an optimum level.
- Optimisation of supply chain processes (e.g. using methods such as LEAN SCM or Six Sigma) raises delivery reliability and simultaneously reduces process times.
- Strategic network optimisation leads to lower transport costs and shorter delivery times.
The benefits of inventory optimisation
Comprehensive supply chain analysis facilitates both cost reductions and service level improvements, and includes the drawing up of a target-orientated implementation roadmap which reflects specific client requirements. J&M has already used this integrated approach successfully to provide its clients with support and help them achieve the following added value:
- Reductions of 20-40% in inventories of finished goods, components and raw materials trough inventory parameter optimisation.
- Increases of 5-10% in order fulfilment rates and on-time deliveries by network optimisation.
- Reductions in planning effort as a result of the implementation of reliable, automated processes.
'The implementation of the concept has delivered slim processes which match our requirements. We are therefore now in a position to increase supply performance and simultaneously reduce costs.'
Marcel Bühlmann, CEO, Midor AG
'Dynamic safety stock planning enables us to pinpoint the ideal cost balance between the requirements of capacity utilisation, stock levels and service level – factors which can sometimes conflict. In addition, our schedulers can now pay more attention to the strategic development of the supply chain.'
Bruno Kulmus, Head of Production and Technology, Griesson - de Beukelaer GmbH & Co. KG
'The well-founded development, assessment and selection of supply chain scenarios gave us a sense of confidence that we are pushing forward in the right direction and are optimally set up for the future ahead.'
Heinrich Becker, Head of European Logistics Management, Hilti AG
