The Business Challenge
For retail companies, inventory is the largest incessant investment today, so getting the most out of this investment is important for success. Yet inventory optimization in an omnichannel world presents a whole new set of predicaments for retail players. Though retail businesses are adopting innovative approaches to enhance their service levels, they fail to devise effective strategies to make it profitable.
Quantzig’s supply chain solutions follow the critical path method for managing and overcoming supply chain disruptions which can otherwise lead to huge financial losses. Request a FREE proposal to gain better insights into our portfolio of services.
Better inventory management plays a crucial role in improving customer satisfaction levels which, in turn, helps retail companies in the long run. Inventory optimization is the easiest proven path to significant cost savings and increased revenue for retail companies. At Quantzig, we offer inventory optimization solutions that help businesses to strike the perfect balance between inventory investments and service levels. Also, it empowers them to build an optimal inventory system that is more connected, intelligent, and scalable.
To combat the growing threat posed by online retailing, a leading retail company in Norway was looking at a holistic approach to inventory management to manage their warehouse at multiple locations, deal with overstocks and out-of-stock scenarios, and overcome inventory risks.
Our inventory optimization experts help leading companies identify and measure the risks in the inventory. Get in touch with them right away to know how.
Solutions Offered and Value Delivered
Quantzig’s inventory optimization experts adopted a comprehensive approach to understanding the pain points in the client’s supply chain network. They leveraged advanced algorithms to optimize stock levels and provide better control over the inventory. Furthermore, this helped the client to save money, improve their customer service levels, and boost customer satisfaction significantly.
Our inventory optimization solutions also empowered the client to:
- Reduce inventory levels by 25%
- Improve cash flow and return on invested capital
- Enhance production cycles, visibility, and agility across all points of supply chain
- Boost supply chain efficiency by 18%
Quantzig’s supply chain solutions empower companies with real-time data visualization dashboards to make accurate decisions and gain better control over the inventory system. Request a FREE demo below to know more.
The Business Challenge
With the ongoing changes in the market environment and the fluctuating demands, retailers are increasingly being challenged by tasks such as demand management, store inventory allocation, and order fulfillment. Most retailers and manufacturers today face similar challenges and one among them revolves around buffer inventory management. This is especially true for paints and adhesive manufacturers as the increasingly unpredictable buying habits of consumers can adversely impact their demand forecasting accuracy, which, in turn, affects their buffer inventory levels.
Inefficiencies in your safety-stock calculation approach can lead to inventory stockouts across distribution centers. Get in Touch with our analytics experts to know how we can help you address this challenge.
Top Challenges Faced by the Client
The client faced several challenges due to their inefficient inventory management processes that led to high inventory holding cost and stockouts. The fragmented nature of their inventory management process and the lack of analytical capabilities further leveraged the supply chain complexities and posed several roadblocks to their supply chain management initiatives. To address these challenges, they approached Quantzig to leverage its inventory management solutions to enhance supply chain visibility and optimize buffer inventory management.
Inventory Levels vs Customer Demands
Problem Statement 1
With fluctuating market demands and order volumes exceeding the buffer value, the client needed to adopt a robust inventory management process to determine the optimal buffer levels for different product categories.
Problem Statement 2
The client’s inventory management strategy failed to offer in-depth insights into their inventory management processes and buffer levels. To tackle this challenge the client was looking at deploying dashboards that would help determine the optimal buffer stock levels for each product and update the same based on daily fluctuations in demand in order to maintain optimal inventory levels in each distribution center.
Problem Statement 3
The third major challenge faced by the client revolved around their inability to meet order fulfillment objectives. By leveraging advanced analytics, the client was looking at gaining real-time insights into their inventory processes to achieve the best possible outcome for any given ship-from-store scenario.
Solutions Offered and Value Delivered
To gain the desired insights and to help the client address their challenges the inventory management experts at Quantzig adopted a comprehensive approach that focused on developing strategies to avoid inventory stockouts and excess inventory while maintaining appropriate buffer stock levels.
The initial phase of this inventory management engagement focused on performing univariate analysis to understand the impact of each factor on demand and inventory levels.
In the second phase, a dedicated team of inventory management experts and data analysts were assigned the task of developing a dynamic buffer stock formula based on standard deviation and excess inventory stocks.
The third phase of this supply chain analytics engagement revolved around developing a system dynamics-based simulation model to accurately predict high-risk scenarios.
Quantzig’s analytics experts gathered and analyzed data from disparate sources to help the client achieve their inventory optimization goals. The inputs from these sources provided relevant insights that helped tackle major challenges that curtailed their inventory management efforts. The inventory management dashboard not only helped the client to sharpen their demand prediction capabilities but also increased gross margin gains by reducing markdowns and avoiding inventory stockouts. As a result, the client realized a significant 15% increase in conversion opportunities from optimized ship-from-store order volumes. Moreover, the integration of a live dashboarding capability enabled the client to effectively track and monitor end-to-end buffer stocks for individual product categories across each distribution center.
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The inventory management dashboard also enabled the client to:
- Achieve a 3X improvement in their inventory forecasting ability
- Identify inefficiencies in the existing safety-stock calculation method
- Gain near real-time insights on inventory processes
- Identify critical nodes and high-risk scenarios
- Achieve a 48% reduction in inventory stockouts
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What is Inventory Management?
LONDON: Quantzig, a leading analytics services provider, has announced the release of their new storyboard on the benefits of leveraging analytics for supply chain and inventory management. Each of these downloadable articles explains how analytics solutions can help companies to optimize their inventory, analyze their real-time supply chain metrics, improve cost structure, and track inventory levels effectively.
Companies across industries are facing critical challenges associated with the volume of inventory transactions, the complexity of the analysis needed to identify trends in inventory use, sales, and forecast demand. Leveraging the use of analytics in supply chain and inventory management can help companies to make well-informed business decisions, optimize inventory, improve the bottom line, enhance supply chain flexibility, and optimize resource usage.
Quantzig’s analytics solutions have helped companies to identify bottlenecks and supply chain risks by offering insights into real-time data. Below, we have summarized some of Quantzig’s free resources and have also highlighted ways in which analytics in supply chain and inventory management has helped businesses to excel in the competitive marketplace.
A proper inventory management system can help in optimizing logistics, improving order fulfilment ratios, and increasing operational efficiency. Request a FREE demo to know how our solutions can help.
#1: How leveraging analytics help in inventory management? Reducing inventory holdings is a daunting task for businesses but adopting the right inventory optimization strategy can make this task easy. Quantzig’s analytics solutions take warehouse inventory management to the next level through sophisticated algorithms and customized dashboards that make stocking recommendations and offer a holistic approach to assess various demand and supply signals within the supply chain. This downloadable free resource offers actionable insights into essential steps to build an inventory optimization strategy.
#2: What are the best practices for warehouse inventory optimization? Monitoring and maintaining optimal levels of warehouse inventory seems to be a difficult task for businesses. However, businesses that succeed in doing so have been able to boost customer satisfaction rates, drive sales, and set an optimal capital cost structure. This free resource discusses some of the best practices that determine the most successful approaches to the complex process of inventory management. Also, it highlights some of the essential factors that evaluate the maturity of the processes associated with warehouse inventory management.
#3: Transformational impacts of analytics on supply chain: Understanding digital customer behaviors and market trends amidst data explosion have become very challenging for businesses. But leveraging analytics can help in dealing with such challenges head-on by offering valuable insights into supply chain data. Incorporating analytics can impact both the top and bottom-line business results positively. A modern and digital supply chain network backed by the power of analytics can improve inventory management and the entire supply chain operations. Download this free resource to know more about the significant impact of analytics on the supply chain.
Want to know how our inventory management solutions can help you optimize the tracking of inventory and materials across the supply network. Get in touch with our experts.
Warehouse Inventory Management: Top 3 Best Practices
Any small-to-medium sized business follows a core business practice of monitoring inventory levels accurately. But when it comes to supplying products through multiple channels on time, businesses do find it challenging. The constant pressure from several buyers and various store locations make it difficult for businesses to keep up with the market demands while monitoring the needs of their customers and the process of inventory. This is why businesses need to have a proper warehouse inventory management practice in place.
A proper warehouse inventory management system is the key to deliver efficiency and maintain a competitive position in the marketplace effectively. Businesses must focus on following best practices for warehouse management in order to move towards an effective inventory optimization approach and eliminate labour-intensive traditional methods.
At Quantzig, we understand the importance of effective warehouse inventory management and the difference it can create in driving optimum business results. And to help companies deal with inventory management challenges at the deepest level, our team of experts have highlighted some of the warehouse inventory management best practices that can guide in expanding product portfolios and supply chains. Also, these practices can assist organizations to boost their service levels and free up time for employees to concentrate on value-adding tasks.
Warehouse Inventory Management Best Practices
Understanding the Value of Inventory Optimization – A Blueprint to Drive Profitability
From the outside, warehouse inventory management seems fairly straightforward. Nothing more than receiving and arranging the inventory so that it could be retrieved quickly when needed. However, inventory management is a lot more than just arrangements. Managers have to maximize productivity, save time, and maintain an optimal level of inventory to improve the profitability and efficiency. The use of RFID tags, barcodes, inventory management systems, and IoT have greatly altered the efficiency of inventory management systems. However, there is still a lot to be done if a company wants to optimize inventory. Here are some top tips that’ll help you to improve your warehouse inventory management.
Maximize vertical space
Space costs money, the more inventory a company holds, the more they have to pay in terms of real estate and utility cost. However, keeping a lower level of stock is not an obvious solution, as it may impact the customer experience. Consequently, a warehouse has to utilize the available amount of square footage by optimizing layouts. One easy way to increase space is to make better use of the vertical space in your facility without neglecting layout optimization best practices. One useful tip is to place items that move less frequently in harder-to-reach vertical storage areas.
Re-evaluate lead times
Lead times are crucial in any retail and manufacturing sector and have a direct impact on inventory management. Lesser the lead time, lower safety stock of a particular product is required. Lead time should include supply delay and reorder delay. Also, when a company sources from an international supplier instead of local or regional ones, it affects the lead time. It is essential to continuously readjust the lead time whenever such changes take place to optimize the supply chain.
Identify your KPIs
Advancements in modern technology have paved the way for advanced warehouse inventory management, including effective data management and analytics capabilities. To measure performance accurately, managers require clearly defined objectives or KPIs. Managers may not be able to focus on improving each and every KPI, and focusing on one may cut a slack for others. For instance, reducing shipment errors and bringing the operational cost down are conflicting in nature.
Supply chain partner selection
A company’s operational performance is only as good as their supply chain partners. The relationship that you built with suppliers, manufacturers, or wholesalers is crucial. A good relationship with the supplier ensures on-time delivery in good condition. A great response time can help reduce the lead time after all. Also, a great relation often means suppliers can be flexible enough for your needs and having to spend less time back and forth in negotiations and contracts.
Using cloud-based software
The shift towards cloud-based platforms is not a fad, it’s a long-term trend that’s here to stay. This is especially true for a global supply chain who has operations all over the world so that they can collaborate and remotely access all important inventory data. A cloud-based system updates inventory amounts, purchase order, and other information in real time. It also ensures that all the data stays intact even when the physical infrastructure of the company faces the problem.
To know more about tips for better warehouse inventory management, inventory optimization, and WMS:
LONDON: Quantzig, a global analytics services provider, has recently completed their latest inventory optimization solution for a personal care product retailer. The growth of the personal care product segment has boosted the revenues of the retail sector. The rising consumption of personal care products can be owed to increasing emphasis on beautification and personal hygiene. Customers are demanding that the use of chemical substances in the product be reduced leading to increased R&D activities.
“The inventory optimization solution offered by Quantzig assisted the personal care retailer to accurately keep track of the products to better serve the customers. Through an effective inventory management solution, businesses can minimize inventory write-offs and overstocks and increase the overall supply chain efficiency.” says an industry expert from Quantzig.
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The inventory optimization solution assisted clients to efficiently track inventory levels with better visibility into the incoming and outbound delivery. By following industry best practices, the client was able to curtail data entry errors, increase productivity, and lower operational costs. Consequently, they were also able to reduce manual physical inventories and lost sales track due to inaccurate stock levels, inventory write-offs, and shrinkage.
Additional Benefits of the Inventory Optimization Solution
- Enable to keep track of inventory, orders, and vendors
- Implement industry best practices to reduce data entry errors
- Efficiently track inventory levels with better visibility into the incoming and outbound delivery
- To know more, request a free proposal
To know more about how our inventory optimization solution helped the personal care product retailer
Inventory is one of the most dreaded words in the retail sector. It involves lots and lots of counting, reconciling, physical inspection, planning, and forecasting. It’s a simple equation, you buy goods paying money, and you get that money back plus some profits after selling it. The problem lies when the equation is not balanced. If the company fails to sell all of its stock, they will have liabilities lying around. On the other hand, if they cannot cater to customers’ demand and understock, that’s a lost opportunity. So this equation needs to be balanced all the times to optimize revenues. Holding up inventory ties up much needed cash for other business functions. As a result, good inventory management is an absolute must in order for a company to prosper.
Setting par levels
One of the most followed inventory management technique is setting up par levels for each product. It is the minimum amount of stock of a particular item to be had at all times. Whenever the inventory dips below the par level, its an indicator to order more of that item. Mostly, managers order the minimum quantity, which gets the stock above the par level. This par level also varies as per how quickly the product sells or how long it takes to reorder. Creating a par level will systemize the process of ordering in the future. As a result, even staffs can make decisions on ordering based on par levels.
FIFO stock method
FIFO, short for first in, first out, is an essential principle in inventory management. As per the rule, the stock that is bought first gets sold first. As a result, the company will mostly have fresh stocks. This rule is even more critical when it comes to perishable goods as it protects the product from spoiling. Another advantage of using FIFO method is that company can cycle through batches faster and get rid of old stock as packaging design and features often change over time.
Adaptability and speedier operations are the keys to successful inventory management. People handling stocks should be quick enough to return a slow-selling item, restock fast selling product, temporarily expand storage space, or manage the relationships with suppliers. Having a good relationship with the supplier helps a lot as they will be willing to negotiate on MOQ, which eases inventory pressures. The communication with the supplier should be smooth, and information regarding seasonality and sales can be shared to synergize operations.
The act of inventory management is not static. Multiple problems can arrive at any time for which companies may not be well-prepared. For instance, situations of sales spike, cash flow shortfall, inventory miscalculation, product shortage, can all cause panic for an inventory manager. However, businesses should have a contingency plan in place to be able to react to such situations quickly without causing any hiccups in the inventory management process.
Today, digital systems have replaced most of the manual paper-based systems. Managers often rely on software and reports to know the stock levels. However, it is important to verify the numbers shown on the screen with the numbers that are actually in the warehouse. It can be done in terms of physical inventory count, spot checking, or cycle counting.
Call it 80:20 rule or ABC method; it is evident that some products need more attention than the others. Using ABC analysis can help businesses to prioritize inventory management which ensures that vital items are never ignored.
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