Inventory Core Competencies
L O G I L I T Y V O YA G E R S O L U T I O N S
An Executive White Paper
Five Inventory Core
Competencies That Can
Make or Break Your
Competitive Advantage
Key Best Practices in the New Inventory
Optimization Center of Excellence
L O G I L I T Y V O YA G E R S O L U T I O N S
An Executive Whitepaper
Table of Contents
Five Inventory Core Competencies
That Can Make or Break Your
Competitive Advantage
Evolution of Inventory Optimization................2
Key Best Practices in the New Inventory Optimization
Center of Excellence
Five Best Practices, Now Inventory
Core Compentencies.........................................3
Executive Overview
1. Multi-level Inventory Optimization
(Optimizing much more than just Finished
Goods Inventory).............................................4
A key characteristic of best-in-class companies is their success in using inventory optimization (IO) and cash management techniques to free up working capital. The amount of a company’s working capital trapped in inventory can be expressed as days inventory outstanding (DIO). As DIO rises due to factors such as slower sales, longer supply chains, SKU proliferation, and higher obsolescence, return on capital employed drops, which can hamper a company’s ability to compete, especially when financing is hard to come by.
To combat these and other supply chain challenges, operations research experts developed a discipline called Inventory Optimization about a decade ago. Early adopters realized hundreds of millions of dollars in documented savings through smarter inventory reductions without sacrificing sales revenue or missing customer commitments. Other supply chains took notice and IO began its evolution from an algorithm-driven point analysis to a spectrum of integrated best practices.
Inventory Optimization Transforms
Best Practices...................................................3
2. Synchronizing Time-Phased Business Cycles..
An Executive White Paper
Five Inventory Core
Competencies That Can
Make or Break Your
Competitive Advantage
Key Best Practices in the New Inventory
Optimization Center of Excellence
L O G I L I T Y V O YA G E R S O L U T I O N S
An Executive Whitepaper
Table of Contents
Five Inventory Core Competencies
That Can Make or Break Your
Competitive Advantage
Evolution of Inventory Optimization................2
Key Best Practices in the New Inventory Optimization
Center of Excellence
Five Best Practices, Now Inventory
Core Compentencies.........................................3
Executive Overview
1. Multi-level Inventory Optimization
(Optimizing much more than just Finished
Goods Inventory).............................................4
A key characteristic of best-in-class companies is their success in using inventory optimization (IO) and cash management techniques to free up working capital. The amount of a company’s working capital trapped in inventory can be expressed as days inventory outstanding (DIO). As DIO rises due to factors such as slower sales, longer supply chains, SKU proliferation, and higher obsolescence, return on capital employed drops, which can hamper a company’s ability to compete, especially when financing is hard to come by.
To combat these and other supply chain challenges, operations research experts developed a discipline called Inventory Optimization about a decade ago. Early adopters realized hundreds of millions of dollars in documented savings through smarter inventory reductions without sacrificing sales revenue or missing customer commitments. Other supply chains took notice and IO began its evolution from an algorithm-driven point analysis to a spectrum of integrated best practices.
Inventory Optimization Transforms
Best Practices...................................................3
2. Synchronizing Time-Phased Business Cycles..