Why don't we have the most requested items in stock?
For trading companies, the ideal is to always have the right goods in the right quantities on the shelves. Few succeed in doing so, and the reality is that many businesses struggle to find the right balance in their stockholding. Sometimes there is a surplus of items that are rarely in demand. Other times, the shelves are empty
when demand suddenly outstrips supply. When popular items run out of stock, the company loses sales and there is a risk that customers will be dissatisfied due to perceived low levels of customer service. Internally, stock shortages also create ‘time thieves’. Buyers and
inventory planners have to spend a lot of time identifying the cause of the problem and then fixing it. Overstocking also means unwanted capital tied up and increases the risk of rejections and poor profitability.
One industry that can have a particularly tough time with inventory optimization is e-commerce companies. These companies often have large product ranges with different demand patterns, and in recent years have faced new challenges in the form of rapid and large changes in customer demand. Companies that try to
this with large safety stocks find it difficult to achieve profitability even if growth is good. Then there are also e-commerce companies that have suffered downturns and where excessive inventory levels contribute to profitability problems.
SOLO provides automated and optimized stock replenishment
Inventory optimization is about having the right goods on the shelves and in the right quantities so that a company can deliver quickly without tying up unnecessary money in overstock. So how do you strike the optimal balance so that the right goods are in the right quantities on the shelves? Many companies where decisions on
purchasing decisions are based on forecasts from sales departments and their estimates of expected sales levels have found this difficult. Combined with time-consuming manual ordering procedures, the result is often excessive stock and service levels that do not meet customer expectations.
Automatically calculated demand forecasts based on statistical calculations that update demand patterns down to the item level are a better tool. This minimizes the risk of selling out of popular items and overstocking shelves with less popular items. In IMI’s system
IMI SOLO also has many other automated features that ensure stock availability. For example, the system generates alert levels when an item is running low. This helps buyers to stay ahead of new orders, which can also be generated automatically by IMI SOLO, and get the
equation of ordering at the right time and in the right quantity. The business value lies, among other things, in maintaining customer service levels, no disruptions in sales and the lowest possible capital tied up. IMI SOLO provides the inventory optimization that is on many companies’ wish list!
Safety stock adapted to volatile demand
Many of IMI’s customers have sharpened their inventory optimization by gradually taking advantage of all the features available in IMI SOLO. Some examples are the ability to sort, group and break down key figures on, for example, A-items, product categories, brands and suppliers. Another example is
the ability to have full control of the service level for the entire range both in the present and in the past, and to see how good the service is for a selected part of the range.
For a company where reducing inventory is a priority goal, IMI SOLO Dashboard also provides quick information on how much inventory can be reduced in a couple of years if inventory management is based on the parameters that apply today. The fact that IMI SOLO adjusts safety stock continuously and dynamically based on factors such as demand patterns, suppliers’ lead times and established service targets is also a reassurance for companies that struggle with large and sudden fluctuations in demand.