Cross Company Inventory Management
June 21 | 16:00h - 17:30h
According to research by Supply Chain Media, almost half (45%) of companies are planning to invest in software for sales & operations planning (S&OP) and 40% in software for end-to-end supply chain visibility. Such high numbers come as no surprise to Jonathan Jackman, Vice President EMEA at Logility. “We understand the reasoning behind that. Companies are keen to get a better grip on their supply chain and integrate more intelligence into their decision-making,” he said.
Multi-echelon inventory management is a seamless fit with this. Traditional inventory management software is focused on optimizing inventory at a single location in the supply chain. Ideally, however, the optimal inventory level at that location should be linked to the inventory present elsewhere in the supply chain. Multi-echelon inventory management considers the end-to-end supply chain and calculates the optimal inventory levels for all locations.
The classical model for a company is to order components from a supplier, keep a stock of those components internally. The supplier also keeps a stock of finished products for all its customers. In the end, the supplier and customer are working in silos: uncertainty and risks accumulate, demand and lead time changes are not well captured, leading to overstocks and shortages.
To overcome those issues, other systems have been put in place such as Vendor Managed Inventory (VMI) or Collaborative Planning, Forecasting and Replenishment (CPFR). However, those systems have come with drawbacks:
• VMI is putting all risks and responsibilities on the supplier.
• CPFR, which is a form of co-planning, is requiring a lot of human and time investment. It is hardly sustainable for more than a handful of suppliers.
Latest technologies (like AI and SaaS) have made it possible to establish new strategies for inventory optimization that go beyond a single company and achieve higher efficiency. You can balance inventories with your suppliers and customers easily, and get the benefits of the VMI and CPFR without the drawbacks. This is cross-company stock optimization.
