We’ve previously addressed some of the fundamental issues with employing an Excel-based system. The weaknesses of these models is currently being brought into particularly sharp relief by the volatility of demand levels and changing consumer behaviour.
Here, we’re going to explore the implications of the multiple elements at play in inventory optimization and how they present a task too complex for the humble spreadsheet.
At the heart of the challenge is the fact that not all products are created equal. Variables across your product base will likely include:
- Values and margins
- Patterns of demand
- Lead times
- Supplier behaviour
- Service level commitments
Achieving the goal of optimized inventory – releasing working capital and improving service levels – requires all of these factors to be taken into account across the product range. Spreadsheets simply cannot comprehend this many elements.
When working in a single dimension, if the calculations in place are correct, spreadsheets work very well for tracking patterns of both sales and supply. Where they struggle, is in levelling up to a multi-dimensional approach which factors in a combination of conditions including lead times, demand, sales volume and sales value.
Without this multifaceted view, your business is going to find it hard to fully optimize and increase sales and service levels. The burden of providing actionable information will fall on the team, requiring labour intensive data gathering and analysis to procure the insight on which to make stock decisions to guarantee order fulfilment.
When you are in a position of relying on the human element to interpret information rather than exploiting machine learning to provide recommendations, it can be hard to get a grip on the process and make sound judgements on what stock to order, when and in what quantity. The default attitudes tend to creep in, reverting to standard policies across the board and losing sight of the differing needs for different products.
The limitations of spreadsheet models again become apparent when considering your approach to lasting change. If your business requires a set reduction in warehouse inventory in the long term in order to achieve financial goals, the likelihood is that the existing models will not have been built to accommodate this form of planning. Another fallible, time-consuming model will have to be created to address this specific target.
If any of this sounds familiar, it’s time to upgrade your processes and make the most of the tools available. With AGR software you can identify patterns of demand and calculate inventory forecasts that are fine-tuned to all of the variables of your specific business. The system applies multiple forecasting methodologies and automatically selects the most appropriate approach for the existing patterns – overruling standard policies in favour of the best solution for the specific question.
As an add-on to existing ERP systems, AGR doesn’t require changes to current software. Instead, it takes information directly from the ERP system and turns the raw data into actionable insight. Not only does the S&OP software remove the risk and pain from the process, it ensures your inventory becomes fully optimized with the right stock in the right place at the right time for all of your customers.
Let us show you the impact that the AGR software can have upon your agility as a business – get in touch today to see just how much of a difference it could be making to your market position.