Nucleus Research 2016 Inventory Optimization Value Matrix

The market for IO solutions continues to change as vendors add more prescriptive analytics for specific inventory attributes and work on improving usability with the addition of visualization, dashboards and notifications for supply chain planners to quickly spot and fix inventory problems.

The leading vendors 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.

Market Overview
More so than almost any other supply chain application, IO solutions can have a huge impact on a company’s finances.

By minimizing inventory, this software frees up working capital for the business and, by guaranteeing that the company has the right stock on hand, it ensures availability of products, parts or materials to provide steady sales for the enterprise.

Historically, these tools provide the highest time to value for companies with complex or global supply chains with large stock holdings and numerous stocking locations. In its research Nucleus found that companies applying IO tools can generally reduce inventory holdings in the range of 10 to 30 percent.

Although most supply chain professionals might not recognize it as such, IO software is really a form of prescriptive analytics.

That’s because these applications recommend where and how much stock should be held to meet a designated service level and to comply with specific inventory policies.

The software itself relies on sophisticated algorithms and complex modeling to make their stocking determinations.

Today multi-echelon (MEIO) functionality is standard fare in market leading solutions so that the software can adjust stock holdings holistically taking into considerations all sites across a network.

Although robust solutions should automate the stocking and replenishment process to a large degree, they should also provide for scenario analysis so planners can weigh tradeoffs in costs and service when making a critical decision that can impact a company’s finances.