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Supply chain excellence requires striking the most profitable balance among service levels, lead times, budgets, risks, and inventory costs. These metrics are largely determined by how a company's supply, production, and distribution network is configured and managed, where it positions its inventory, and what inventory stocking strategies have been implemented. Inventory optimization is the discipline of continuously managing inventory policies to optimize supply chain performance against business objectives, changing market conditions, risks, and supply chain constraints. These policies include what inventories to carry, where, in what form, and how much across the procurement, manufacturing, and distribution network.
The i2 solution: i2 Inventory Optimization
i2 Inventory Optimization can enable an organization to fundamentally improve
service levels, minimize inventory costs, and reduce lead times.
All inventories are not bad. In fact, inventory is the lifeblood of the supply chain. i2 Inventory Optimization enables peak efficiency by helping companies ensure that desirable levels of inventories are maintained where needed, while excess inventory is eliminated. Just as all inventories are not bad, not all products are created equal. i2 Inventory Optimization helps companies differentiate between their key products and the rest of the product line as well as adopt inventory policies that will maximize the volume and profitability of those key products during their life cycle.
i2 Inventory Optimization is based on years of experience working with some of the best-managed supply chains in the world. i2 observed that these industry leaders' performance was differentiated through five best practices: monitoring customer buying behavior, "ABC" segmentation, postponement, optimized inventory policies, and continuous learning and process improvement. i2 Inventory Optimization can enable an organization to improve service levels and reduce inventory costs and lead times by integrating with ERP and supply chain systems to institutionalize these five best practices.
Key capabilities of i2 Inventory Optimization can include:
- Tracking and analysis of transaction, customer buying patterns, and inventory performance
- Multi-dimensional ABC segmentation by demand patterns and volumes, service
criticality, product structure and life cycles, lead times, competitive
positioning, or custom attributes
- Best inventory policy determination for each SKU at each location it will be stocked
- Multi-stage inventory and postponement optimization
- Easy composition and analysis of "what-if" scenarios
- Actual performance monitoring for continuous learning and process improvement
- Rapid integration through services-based architecture
- Rich and easily extensible library of packaged metrics, KPIs, and reports
Benefits of i2 Inventory Optimization can include:
- Reduced inventory levels, expediting, and overall logistics costs
- Increased service-level performance and customer satisfaction
- Improved asset utilization and inventory turns
- Improved inventory performance
- Improved product availability while reducing carrying costs, risks, and cash-to-cash cycles
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