The Silent Superhero of any Business - Inventory Optimisation
9th June 2023
Many companies are grappling with the changing demands of inventory in the current market conditions. Impacts on a business include excess inventory, customer service challenges, increased carrying costs, reduced cash flow, opportunity cost, increased storage and handling costs, risk of obsolescence, inaccurate demand forecasting and ultimately, financial losses. It is vital to ensure strategic planning and optimisation of your inventory to mitigate these negative effects.
Synergic Technologies is passionate about helping local businesses become better and more successful within their market through the use of the latest supply chain technologies and our wide range of supply chain expertise. We understand how important it is for companies to implement strategic planning and inventory management processes to reduce short-term pressure and financial losses, especially in today’s market when costs are rising and budgets are tight, which in turn ensures long-term success.
Tangible benefits we have seen from optimising inventory:
80% reduction in stock-outs
27% reduction in inventory levels
Sales growth of 17%
43% reduction in direct operating costs
Optimising inventory and having good inventory control is crucial to the success of a company for several reasons:
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Meeting customer demand: Effective inventory control ensures that the company has the right products available at the right time to meet customer demand. By accurately tracking inventory levels and forecasting demand, companies can avoid stockouts, minimize backorders, and provide customers with timely deliveries. This enhances customer satisfaction and loyalty. We use strategies that are proven to reduce stockout rates by up to 80%.
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Inventory represents a significant portion of a company's assets, and effective control helps manage costs. Overstocking leads to excessive holding costs, such as warehousing, insurance, and obsolescence. On the other hand, understocking results in missed sales opportunities and the potential loss of customers. Optimising inventory levels through control mechanisms helps strike the right balance, reducing carrying costs while maximizing revenue. We have helped reduce clients inventory levels by 27% while, at the same time, growing sales by 17%.
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Inventory ties up a company's cash, and excessive inventory can strain cash flow. By implementing inventory control measures, companies can avoid tying up unnecessary capital in excess stock. This allows for better allocation of resources to other critical areas of the business, such as investments, marketing, and expansion. We have seen reductions in inventory costs between 11% - 38%, giving your cashflow a boost.
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Proper inventory control and optimisation leads to efficient operations throughout the supply chain. It ensures that materials and components are available for production when needed, minimizing production delays or disruptions. It also facilitates smoother logistics and reduces lead times, enabling timely order fulfilment. Efficient operations contribute to improved productivity, reduced costs, and increased customer satisfaction. Expect huge improvements in customer satisfaction as well as significant reductions in operating costs of up to 43% following our strategies.
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Inventory control systems provide valuable data for demand forecasting and planning. By analysing inventory trends, companies can identify patterns, seasonality, and customer preferences. This information helps in making informed decisions regarding production, procurement, and inventory replenishment. Accurate demand forecasting and planning enable better resource allocation and inventory optimisation. Using S&OP you can expect forecasting 18% higher accuracy in your forecasts and an improvement of 37% better cash-to-cash cycle (Reported by NZTE from the Aberdeen Group Research (2014) best vs laggards in S&OP)
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Inventory optimisation and control helps mitigate various risks associated with inventory management. It minimizes the risk of stock obsolescence by preventing excess stock accumulation. It also reduces the risk of stockouts, which can result in lost sales, dissatisfied customers, and a damaged reputation. By having control over inventory levels, companies can better respond to market fluctuations, changes in customer preferences, and unexpected disruptions in the supply chain. Our Stringent tool helps to optimise your stock on hand, keeping it relevant to the market and reducing the risk of obsolescence.
Overall, inventory optimisation and effective inventory control is crucial for companies to ensure customer satisfaction, manage costs, maintain healthy cash flow, optimise operations, make informed decisions, and mitigate inventory-related risks. It plays a vital role in driving the success and profitability of a company.
If you are interested in talking to one of our experts on inventory optimisation, control or planning, click the button below to find out how we can help.