What is Inventory Optimization
Inventory optimization is a method of balancing capital investment constraints or objectives and service-level goals over a large assortment of stock-keeping units (SKUs) while taking demand volatility into account. Ok, that is the technical description of Inventory Optimization, at Intuendi we see inventory optimization as a method to increase the return on your investment in stock, that return could be increased profits, better service level or simply reduced risk.
Such is the success of inventory optimization that large retailers and manufacturing companies are constantly turning inventory optimization to calculate the ideal inventory targets for all Stock Keeping Units. By the way, if that sounds like a big challenge do not worry because Intuendi is here with inventory optimization to quickly turn you into an inventory ninja!
Why do we at Intuendi believe in inventory optimization and turning you into an inventory ninja? It is because we have seen and helped other companies quickly benefit form inventory optimization and what it can do for their company. We recently read a study by IDC Manufacturing Insights focused on inventory optimization.
In their report on inventory optimization, it found that many companies who had implemented inventory optimization reduced their inventory levels by up to 25% in one year and further enjoyed a discounted cash flow above 50% in less than two years! So what can inventory optimization do for your company?
Before technology like Intuendi, it was hard to become an inventory ninja and implement inventory optimization, why? We all understand that every company has the challenge of matching its supply volume to customer demand. One reports say that on average a company needs 10.6 percent of annual revenues in inventory and with the typical cost of carrying inventory around 10 percent of the inventory value. So you could say that over 1 percent of all revenue is spent on carrying inventory.
To make matters worse with the growth of online selling the challenge of managing inventory is further increased by the Long Tail phenomenon which is causing a greater percentage of the total sales to come from a large number of products with low sales volume which is increasing the volume and the risk required to manage your inventory.
Hence you can see why people are looking to become an inventory ninja and turn to inventory optimization…. by the way, the simplest and easiest way to become an inventory ninja and start implementing inventory optimization is to contact us!