An AMEND approach to…….
Inventory Reduction
Since the start of the pandemic, AMEND has helped many of our clients improve their inventory position. For most of our clients, this has meant a simultaneous inventory reduction coupled with a sales improvement. However, with recent inflationary and economic concerns, we’ve found ourselves working with clients operating from the other end of the spectrum. Many clients now find themselves asking: How can we optimize the inventory that we have? How do we reduce inventory to pull out costs? What can we do to free up cash?
Inventory is constantly changing, so getting it right is hard. Too little and you miss the important sales; too much and you burn essential resources.
Current inventory approaches use Economic Order Quantities and Safety Stock calculations that have historically poor assumptions. These approaches are based in “normal” demand patterns and lead times, but over the past few years, these patterns have changed drastically, leaving inventory more volatile than before.
This demand data is pretty common.
We start by simulating your demand data with your current inventory parameters (Lead time, MIN, MAX, etc.). We show how your inventory performs.
We then adjust your model parameters and search for a better answer to fit your business needs. In this case, there was excess inventory, and a lower MIN and MAX works to reduce inventory from ~9000 on average to ~5500 units (~38%).
If you had 100 SKUs like this, at $5.00 unit, this is $1,750,000 cash.
At AMEND, we use your data and systems to leverage Artificial Intelligence and find optimal ordering parameters, while injecting updates back into your current system. We have done this as one-time savings for quick victories, and long-term SaaS solutions. For our clients, AMEND’s approach has decreased inventory by an average of 30% and Stock-outs by an average of 50%, when compared to these legacy approaches.
The process we’ve developed for inventory optimization has been applied in perishable, manufacturing, distribution, retail and more.
Give us a call!
We love this type of work. It is exciting for us and our clients. If you would like to explore A.I. driven inventory strategy and recommendations, please just let us know below.
