Tuesday, February 10, 2009

Recessionary Times Require New Approaches to Inventory Management

With our economy in crisis, firms that hold large amounts of inventory are focusing efforts at squeezing as much cash as possible out of this valuable asset in order to improve the performance of working capital. While care must be taken to prevent cutting inventory with a hatchet, there are technology tools available to help use a scalpel to reduce inventory without negatively impacting service levels.

Inventory optimization is such a tool that takes in to account what drives and impacts the performance of inventory. These drivers are normally dynamic variables that can change on any given week or month. What's driving the performance of inventory is quite different among firms. One might be heavily dependent on lead times, another will be dependent on demand behavior.

Given the thousands of SKU's that are managed across a network of multiple loations, this can be a complex process. Luckily with inventory optimization, this solution can remove the levels of complexity that exist in a supply chain. At TCLogic, we like to say, "Inventory intelligence that gets results." The intelligence lies within the current business systems, or ERP. The results achieved are after the intelligence is harvested, analyzed, and optimized stocking strategies developed. Our customers often gain results such as reducing inventory by as much as 30% while achieving targeted service levels above 98%.

Feel free to visit www.tclogic.com for additional information about inventory optimization and how to effectively reduce inventory while protecting critically high service levels.