What is Inventory Optimization?
Inventory optimization is the practice of determining inventory levels to meet customer demand with the desired levels of service at the lowest cost.
Traditionally, organizations are challenged with inventory optimization as sites in the supply chain often hold excess inventories to avoid stock outs. These buffers exist to compensate for supply/demand variations and imperfect information related to inbound supply and outbound demand plans, forecasts, information lead times and actuals.
The lack of an integrated, real-time view of customer demand and supply changes can lead to the “bullwhip effect” where uncertainty at every tier of supply can lead to inflated stock levels for each successive upstream tier. To further complicate matters, many organizations rely on enterprise-centric systems, that can only plan and manage inventory within the silo of a single ERP instance, and are not capable of optimizing across multiple ERP instances within the enterprise or across the extended business network.
One Network's Perspective on Inventory Optimization
Effectively managing and optimizing inventory on the NEO Platform offers unique advantages. It captures multi-party variables such as lead times, manufacturing frequency, batch size, and ordering policies from across the supply chain, and using advanced algorithms, exception-based forecasts, and real-time downstream demand signals, suggests and even automatically adjusts inventories to optimal levels.
One Network’s Multi-Tier Inventory Optimization and Management Solution gives you real-time inventory visibility across sites, hubs, suppliers, and in-transit. The result is reduced inventories, improved service levels, reduced stock outs, and improved revenues for all trading partners. Intelligent NEO agents continually monitor shifts in demand and supply, and re-match supply to demand to keep inventory levels optimized at every node - to meet demand at the desired services levels and the lowest cost.