Nucleus Research is known for focusing on the financial impact of technology, so that is where James Cooke, principal analyst, begins.
He reiterates why his firm sees inventory optimization (IO) solutions as so important.
“More than almost any other supply chain application, IO solutions can have a huge impact on a company’s finances.”
Historically, Nucleus Research found that “IO tools provide the highest time to value for companies with complex or global supply chains with large stock holdings and numerous stocking location,” and can reduce inventory by 10-30 percent.
This, he says, creates a large value proposition for leading IO vendors who can “offer a high return on investment [ROI] by providing sophisticated solutions to streamline inventory across the entire supply chain while maintaining the correct amounts of stock to drive sales.”
Cooke says that minimizing inventory “frees up working capital for the business and, by guaranteeing that the company has the right stock on hand, ensures availability of products, parts or materials to provide steady sales for the enterprise.”
Interestingly, he notes that while most companies justify inventory optimization based on inventory savings, improving service to customers is actually the biggest motivation and payback in most projects.
Cooke says that IO strategies tend to differ by industry: retailers focus on what and where to hold inventory across a multi-channel environment; whereas manufacturers emphasize production capacity; electronics firms worry about obsolete inventory.
Inventory optimization vendors, Cooke says, are providing more prescriptive analytics and are working to improve usability. Leading vendors, he says, are reinvesting in functionality, analytics, and data and model visualization capabilities.
Cooke points to specific trends:
Cooke adds that larger enterprises are starting to consolidate their planning operations into centralized teams of dedicated users.
At small and midsized businesses (SMB), the biggest obstacle he says is supply chain acceptance, hence intensifying the need to make tools easier to use and more intuitive.
Source: ToolsGroup Blog