There is a large difference between managing and optimizing your inventory.
ERP systems can track items; provide the data required to analyse sales and inform the process from initial purchase order to payment, but they can’t handle supply chain optimization.
In many cases, the tasks underpinning the optimization process have to be handled separately by the purchasing, category management, finance and logistics teams. Each user group is required to take data from the ERP system and create their own tools to help them manage the tasks at hand.
This not only requires valuable time resources, it can also lead to a number of issues:
- Unreliable, error-prone self-built spreadsheets being used to manage the complex calculations required to translate sales patterns into real time demand forecasts
- Single-dimension ‘ABC’ categorisation and replenishment policies being applied as a result of the shortcomings of models in Excel
- Fluctuating stock levels with excess stock for some products and insufficient units for others
- Sub-optimal service levels and possible stock-outs
- Poor stock-turn rates
- Working capital tied up in inventory resulting in missed sales opportunities.
A better way
As previously mentioned, whilst Excel is a powerful and valuable tool, it simply can’t cope with the complex supply and demand dynamics of your market place. It cannot accommodate your needs of considering multiple start- and end-points, thousands of products and a turbulent retail environment.
This is where the AGR S&OP software steps in to offer a better approach. This solution provides a toolset that incorporates demand and supply variability at individual product level. Inventory optimization is managed through dynamic adjustment to stock rules and replenishment parameters – providing those managing the process with actionable alerts and guidance.
Once freed from the pain of gathering, analysing and interpreting information from the ERP system, the teams are enabled to proactively manage the complex relationships along the supply chain. Doing so in an insight-driven way allows them to drive costs down and service levels (and therefore sales) up.
The business case for the AGR software practically writes itself:
Cost reduction through increased efficiencies:
- Free up human resources to either drive higher value activity or reduce headcount
- Reduce warehouse space with streamlined stock levels
- Lower cost of service
- Increase sales, avoid fines for missed sales levels and see happier clients.
Drive profitable decision making with timely analytics. With all teams operating from a single version of the truth in one data source, S&OP becomes a far more valuable exercise. Forecasts start to reflect the reality of the bigger picture rather than siloed snapshots.
Risk analysis. Being able to identify vulnerabilities in the supply chain provides the insight required to take action and reinforce the weak points to reduce risk to the business. Whether it’s backup suppliers or plans to cope with regional disruption, knowledge is power.
Opportunity identification. With more time and insight your business can move beyond just managing your stock processes to recognise larger opportunities to make lasting improvements.
Release working capital. Without capital tied up in unnecessary overstocks your cash flow situation will see immediate benefits.
Developed with best practice business processes in mind, the AGR software will help you to improve forecast accuracy, optimize inventory levels and lower stock value commitment. A simple, cost-effective solution which acts as an add-on to your existing ERP system, AGR is easy to adopt and allows for an integrated function across your S&OP process.
Let us show you the impact that the AGR software can have upon your inventory optimization – get in touch today to see just how much of a difference it could be making to your working capital position.