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Supply Chain Firms Focusing On Inventory Optimization
By Mike Sachoff
Staff Writer
Article Date: 2009-09-04
Inventory optimization (IO) is now among the top three priorities for many supply chain organizations as they look to create increased efficiencies during the global downturn, according to a recent report from IDC Manufacturing Insights.
"Dramatic changes in business are having an inevitable impact on a company's supply chain network," said Simon Ellis, IDC Manufacturing Insights Practice Director, Supply Chain.
"Optimizing efficiencies in the supply chain - particularly inventory - has been propelled up the priority list for many companies. Increasing the productivity of assets has taken on more importance because of its direct relationship toward maximizing working capital and improving the bottom line."
IO technology has increasingly been adopted and deployed by leading-edge companies. Decision processes such as overall sales, inventory, and operations panning (SI&OP), "profitable proximity" sourcing and new product innovation can all be aided by this technology.
"If inventory optimization is not on your short list of priority projects, you could be failing to capitalize on significant supply chain management benefits," said Ellis.
The cost of inventory optimization is variable but a typical implementation should be expected to cost between $300,000 and $500,000 for software, plus implementation costs in the same range. It's not unusual for these improvements to provide a return on investment within a year and result in inventory reduction in a global supply chain as much as 25 percent.
About the Author:
Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.
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