Inventory Strategy

Proliferating SKUs, changing consumer demands, increased market volatility, and a focus on lowering operational costs are key drivers for any inventory strategy. INSIGHT offers three tools to address these challenges: network optimization, a specialized inventory analysis tool, and network simulation. All three tools are contained in the INSIGHT network optimization software packages, SAILS and IEO and are fully integrated with respect to the user interface and underlying database.

Network optimization can address inventory strategy in the context of a multi-period model. Inventory min/max targets may be specified by location/commodity/time period and are specified as a function of anticipated demand. This approach directly corresponds to the common industry practice of setting inventory targets as a function of, for example, number of days of demand. What makes this unique approach even more powerful is that the targets may be violated at a specified cost such as the cost of a stock out. In this manner, stock out costs are traded off against the cost of holding inventory, as well as all other costs in the supply chain.

A greater level of detail is available in the post-optimization inventory analysis module. Unlike network models which are typically built at a product family level of detail, this module drills down to the SKU level and computes cycle, safety and in-transit stocks by location/SKU combination for a specified level of service.

Finally, the INSIGHT supply chain simulation module, SCOREKEEPER, is a highly detailed, stochastic, identity simulation model of the entire supply chain. It processes a daily stream of customer orders, tracks inventory by location and commodity (either by major product family or by SKU), offers numerous choices for handling stock-outs, contains sophisticated inventory control, forecasting and production planning & scheduling options, and explicitly handles supply chain uncertainty:  demand, supply, production yields, transit times, and so on.






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