Where's My ROI?
Sound familiar? You've implemented the systems and made the investments – but have you achieved the intended benefits and return on investment? MPBA can help you unlock that investment with a direct affect on the bottom line. We have developed a number of ROI services which are designed to provide a quick and long-lasting improvement to our customers by targeting improvements in business processes as well as the systems that support them.
Balancing Inventory Investment with Customer Demand
Our experience shows:
- companies are frustrated in their efforts to improve availability and reduce inventory investment
- expectations that a new computer system will deliver bottom line benefits have not been met
- software or consulting alone will not manage inventory and deliver benefits needed to remain competitive
Even though inventories are under constant analysis and manipulation, permanent inventory reduction opportunities go largely untapped with most companies consistently carrying too much inventory. Well-intentioned efforts to reduce inventory - 'inventory diets' usually get only temporary results.
Without effective business process changes, the organisation can easily slip back to the old ways with inventories (and costs) just climbing up again.
Balancing Inventory Investment with Customer Demand
All organisations, irrespective of their size, need to maximise customer satisfaction. Against the background of the risks and uncertainties of supply and demand they invest in inventory - seeking to find the balance that satisfies their customers with the lowest inventory investment. But very few are able to accurately forecast demand or have the means to recognise and address the many supply constraints and other risks that result in the creation of inventory.
Traditional inventory management systems cater for the replenishment of line items but are not able to model different scenarios and incorporate changes quickly and easily. They fail to provide the strategic input needed to drive the process from a management or marketing perspective. They are not supported by processes able to handle the 'people' issues that govern the successful integration of the needs of the business as a whole.
The Value of Product Availability
In an increasingly competitive environment, where product differentiation and brand loyalty are on the wane, product availability plays a critical role in securing new business and in customer retention. In short, it provides competitive advantage.
To deliver this competitive advantage, MPBA have developed a methodology built around the Optimus toolset. Together we have world-class methodologies and decision-support tools to meet your needs - to create and sustain inventory optimisation throughout the supply chain - driven by the compulsion to maximise customer satisfaction.
Inventory, and its attracted costs, are reduced while customer satisfaction is improved and sustained.
What do we actually do?
Using Optimus, we take the guesswork out of managing inventory. The methodology provides the strategic input that links the service objectives of a business to the processes involved in stock replenishment for each of its line items. World-class modelling tools identify and quantify the causes of inventory at each node in the supply chain, improve demand forecasting and set appropriate stockholding targets. The system identifies, in descending order of importance, the key issues requiring attention to yield the greatest results in:
- supplier management
- expediting
- order replenishment
- demand forecasting
- safety stock setting
- order pipeline monitoring
- excess stock management
Extensive simulation capabilities enable inventory investments and service levels to be optimised. Key performance indicators are extensively reported in graphics designed to highlight key performance data.
The associated services provide a structured inventory management methodology supported by these decision-support tools designed to reduce inventory levels and, at the same time, improve service levels by ensuring stock availability. The methodology establishes formal procedures and disciplines, improves communication within the client's business, introduces feedback mechanisms, performance measurements and sustains measurable continuous improvement.
The Optimus system is designed as a management tool, not a transaction based system. Based on demand forecasts, customers orders, current stock levels, the order pipeline and supplier performance data, Optimus calculates ideal levels of safety stock and optimal replenishment orders for every line item. Data is extracted from host systems via conventional ASCII import or ODBC links and inventory replenishment recommendations can be actioned by Optimus or on the client's host system. When run on a server (Windows or Unix), Optimus can be used by any number of users in the organisation.
Benefits:
- Improved customer satisfaction
- Improved customer retention
- Increased sales
- Improved profitability
- Improved return on investment
- Improved competitive differentiation
- Reduced warehouse footprint
- Reduced provisions for obsolescence
- Improved cash flow
If the goal is to reduce inventory while holding service levels static, there have been examples of 50% reduction in investment in inventory, though 35% is more usual. However, in these days of Customer Relationship Management (CRM) initiatives most companies wish to increase service levels as well as reduce inventory. The savings in this scenario are typically in excess of 20% on inventory and a similar financial benefit in terms of customer satisfaction and increased sales.
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