Removing Barriers to Inventory Optimization

Companies that embrace multi-echelon inventory optimization (MEIO) achieve, on average, a 28% increase in inventory turns.

This paper presents a simple, three-step approach that helps remove barriers to inventory optimization success and shows how leading supply chain organizations use powerful business process and technology enablers to achieve and sustain improved inventory performance.

1. Assess your organization’s capabilities from the perspectives of inventory performance, business process/inventory management expertise, and technology and organizational readiness. Understanding your current state on these critical dimensions lays the foundation for a solid business case that delivers real-world benefits.
2. Create a future state inventory optimization capability - process, technology, organization - that provides your supply chain team with a roadmap to success.
3. Drive continuous and strategic value by extending the inventory optimization capability into broader, longer term supply chain improvements.

Over time, the trade-off between customer service and inventory cost (known as an efficient frontier) can be adjusted to meet the risk profile of the organization. Implementing multi-echelon inventory optimization across the end-to-end, global supply chain creates previously unavailable trade-off curves that deliver higher levels of service at lower inventory cost. This “virtuous cycle” can be a powerful driver of continuous improvement for years.