In focus - Inventory Target Setting

Inventory Optimization as an Outsourced Service

Many companies collect detailed demand data, but don’t possess the analytical tools to choose the right inventory targets to achieve their performance goals. We can offer a service that analyzes and understands their demand and supply uncertainty and calculates optimized inventory targets to achieve customer service level and working capital objectives.

Inventory target setting delivered as an outsourced service allows companies to avoid implementing expensive systems and processes. Instead, users take advantage of market leading advanced inventory modeling and optimization engine at their disposal. A secure cloud-based portal allows users to easily upload data and retrieve inventory recommendations. Users get SKU-Location level inventory targets, such as safety stocks and reorder points, for a low monthly cost. This approach allows companies to deploy optimized inventory targets using their current systems and processes. They can quickly deliver revenue, margin and cost reduction objectives while avoiding both capital expenditure and cost of ownership.

Small Investments - Big Benefits

This service is targeted at companies who need reliable inventory targets, yet don’t want to make a large upfront investment in software and infrastructure. It benefits supply chain, operations and finance executives looking to improve inventory performance, either to improve customer service levels, increased free cash flow, or improve ROIC. By improving inventory targets, companies increase cash and reduce global inventory levels while improving or maintaining excellent customer-service levels. Individual companies will find different results from this process, but can typically expect to generate cash of between 10 and 30% of their inventory value.

The result is a rightsizing of inventory to eliminate the least effective inventory and insure profit-generating and strategic products are properly served. All inventories are adjusted to targeted customer service levels. Capital is reallocated to the most financially productive areas. Inventories that are not aligned with profits and customer service are drawn down, freeing up additional cash flow.

How It Works

A pre-configured offsite engine combined with our expertise and accumulated domain experience allows clients to achieve results in a few weeks and significantly mitigates project risk. No training or special expertise is required. Optimized SKU-Location level inventory recommendations are returned to the client via the same portal and imported into the client’s ERP for daily execution. The portal also allows clients to follow up on historic data transactions, manage their account and obtain support.

If you want to know more about Inventory Target Setting, please contact our Sales Director Magnus Edberg on magnus.edberg@optilon.se, +46 709 379 280.