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  • Writer's picturePromosoft

How inventory optimization keeps the inventory balance at the right level

For trading companies, it is optimal to always have the right products in the right number on the warehouse shelves. Few succeed in this and the reality is rather that many companies find it difficult to find the right balance in inventory management and in optimizing inventory. Sometimes there is a surplus of items that are rarely in demand. Other times, the warehouse shelves are empty when demand is suddenly greater than supply.

Why optimize your inventory?

When popular items run out of stock, the company loses sales and there is a risk that customers will be dissatisfied because they perceive the level of customer service to be low. Internally, deficiencies in inventory also create "time thieves". Buyers and inventory planners have to spend a lot of time mapping out what the problem is and then fixing it. Overstock also means unwanted capital tie-up and an increased risk of cancellations and lack of profitability.

One industry that can have an extra tough time with inventory optimization is e-commerce companies. These companies often have large assortments with different demand patterns and in recent years they have been faced with new challenges in the form of rapid and large changes in customer demand.

Companies that try to counter this with large safety stocks find it difficult to reach profitability even if growth is good. Then there are also e-commerce companies that have suffered from downturns and where excessively large inventory values contribute to profitability problems.

SOLO provides an automated inventory optimization

How do you then create the optimal balance so that the right goods are in the right number on the warehouse shelves?Many companies where purchasing and restocking decisions are based on forecasts from sales departments and their estimates of expected sales levels have found that difficult.In combination with time-consuming manual ordering routines, the result is often excessive stock and service levels that do not meet customer expectations.

Automatically calculated demand forecasts that are based on statistical calculations and that update demand patterns down to the item level are a better tool.This minimizes the risk of selling out of popular items and overflowing warehouse shelves with less demanded items.In Promosoft's system SOLO, there are also many other automatic functions that ensure stock availability.An example is that the system generates alarm levels when an article starts to run out.

It helps buyers stay ahead of new orders, which can also be automatically generated by SOLO, and get the equation together to order at the right time and in the right quantity.The business value lies, among other things, in a maintained level of customer service, no disruptions in sales and the lowest possible capital tie-up.SOLO provides the warehouse optimization that is on many companies' wish lists!

Safety stock adapted to volatile demand

Many of Promosoft's customers have sharpened their inventory optimization by gradually taking advantage of all the functions available in SOLO.Some examples are inventory optimization is about having the right goods on the shelf and in the right quantities so that a company can deliver quickly without tying up an unnecessary amount of money in an overstock.

The ability to sort, group and break down key figures on, for example, A items, product categories, brands and suppliers.Another example is the possibility of having full control over the level of service for the entire range both in the present and back in time, and to see how good the service is for a selected part of the range.

For a company where a reduced inventory is a priority goal, the SOLO Dashboard also quickly informs you of how much the inventory can be reduced in a couple of years' time if the inventory management takes place based on the parameters that apply today.The fact that SOLO adjusts safety stock continuously and dynamically based on factors such as demand patterns, suppliers' lead times and established service targets is also a security for companies that struggle with large and sudden fluctuations in demand.

Did you want to know more about how SOLO can help you optimize your inventory? Submit a meeting booking and we will help you.

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