Tag: inventory management model

demand forecasting

Taming Data Chaos in the Retail Sector with the Help of Inventory Management Dashboards

The client is a multinational paints and adhesives manufacturer and retailer based out of Europe. The organization operates under two signature brands with 50+ retail outlets located in over 15 countries globally. The client is also an industry-recognized wholesale distributor of paints and adhesives used in several industrial processes.

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

inventory managementProblem 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.

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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.

Phase 1

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.

Phase 2

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.

Phase 3

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?

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warehouse inventory management

6 Best Practices for Warehouse Inventory Management

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.

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Warehouse Inventory Management Best Practices

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IR40

Top Tips for Better Warehouse Inventory Management

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 toFree demo 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.

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Personal Care Retailer market analysis – How inventory optimization solutions helped a personal care product retailer to optimize the physical inventory levels

Inventory OptimizationLONDON: 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

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IR27

The Best of Inventory Management Techniques – Optimizing Stock Management

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 optimizeFree demo 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.

Manage relationships

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.

Contingency plan

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.

Stock auditing

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.

ABC method

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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Consumer Goods Manufacturer Improves the Accuracy of Inventory Orders with the help of Inventory Management Solution

consumer goods

LONDON: Quantzig, a global analytics services provider, has recently completed their latest inventory management solution for a consumer goods manufacturer. Companies in the consumer goods market have started launching new and innovative products to keep up with the growing needs of the customers. Furthermore, the consumer goods industry has undergone an enormous transformation over the past few years. Also, top players in the consumer goods manufacturing space are aiming at developing strategies to leverage their profits and market share in an interconnected and competitive environment.

“Leading firms are now exploiting technology-driven opportunities to understand the consumers better and connect with them better. Also, several manufacturers have been successful in shifting to e-commerce platforms through which consumers can undertake transactions and also customize the products and services offered. “says an industry expert from Quantzig.

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The inventory management solution helped the client to develop a more efficient inventory management system that keeps track of their resources. The solution also helped the client in monitoring and control, stock-flow analysis, and issue resolution. The client also developed a more organized warehouse by improving the accuracy of inventory orders.

Additional Benefits of the inventory management solution

  • Reduce the liabilities and loss created by overstocking
  • Implement a new inventory management system that preschedules releases based on the track records
  • Devise effective ways to keep track of the stocks and maintain accurate counts to ensure the availability of products
  • To know more, request a free proposal

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Answers to the questions

Leveraging Inventory Optimization for a Household Products Retailer to Reduce Risks and Improve Business Performance

In the retail landscape, the efficiency of the retailer solely lies in the ability to deliver the goods and services at the right place and at the right time; while paying heed to the quality of the products. So, rendering these services can only happen with the assistance of an inventory management solution. Apart from the conventional warehouse management, inventory management involves effectively keeping a track of products and maintaining accurate records to combat issues such as delays, short of products, and purchase of the wrong inventory. In the household products retail space, inventory management helps deliver detailed insights into the items right from the raw materials to the finished products and the suppliers. For several organizations in the household products retail space, inventory management determines the set of guidelines to follow to understand the level of inventory to be maintained and to safeguard variations in the goods.

With the aim to gain better visibility into the household products retail space, leading global retailers are approaching companies like Quantzig. With years of expertise in offering a plethora of services, Quantzig’s inventory management helps manufacturers in the consumer goods space effectively keep a tab on the goods available and the ones that have been sold.QZ- request a demo

The Business Challenge

A renowned household products retailer with a considerable number of manufacturing units spread across the globe was facing certain predicaments predicting and maintaining inventory and determining the average lifespan of the household products. The household products retailer wanted to analyze the variation in the product demand and judiciously deliver goods to meet the supply gap. Moreover, with the aid of inventory management, the household products retailer wanted to keep a track of the inventory levels and maintain price tendency for commodities.

Household Products

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Benefits of Inventory Management

The inventory management solution offered by Quantzig helped the household products retailer maintain aggregate inventory levels for the products that have been sold and ensure better consistency in products stock. Also, the engagement assisted the household products manufacturer to deal with price fluctuations and address variations in the price by leveraging effective inventory management techniques. Furthermore, the household products retailing firm was able to save on transportation costs and improve the overall service delivery.

Inventory Management Predictive Insights:

  • Effectively met the variations in the customer demand and offered customized products to the clients
  • Addressed issues pertaining to delays in the goods and hedged against price increases
  • Retained the potential customers and witnessed a 20% increase in the overall customer satisfaction
  • Identified the gaps in the supply-demand and adequately met the demands of the customers
  • Forecasted and oversaw inventory levels and increased savings

 

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Laptop with pen and spiral notebook on desk.

30% improved service levels achieved by leading beverages manufacturer through demand forecasting and inventory management model implementation

Business Challenge: Eliminating Issues with accuracy of demand forecasting

A leading beverages manufacturer was facing issues with their ability to conduct demand forecasting and determine the optimal volumes of products to be manufactured.

Situation: Issues with managing day to day operations and making efficient use of customer data

As a result of non-accurate demand forecasting, the client was facing issues such as frequent stock outs, problems with lead times, with managing demand levels with suppliers, and making efficient use of data from retailers.

Solution/Approach: Implemented demand forecasting and inventory management model

We conducted in-depth analysis of the existing customer data to classify the information by products, customers/retailers, purchase patterns, seasonal trends etc. These details were aggregated and we used regression models to devise a robust demand forecasting and inventory management model.

Impact: Improved service levels and accuracy of forecasting

The client was able to improve its service levels through implementation of effective demand forecasting and inventory management model, which allowed them in accurate demand forecasting at an individual product and retailer levels.