Boston—March 8, 2012—As a new addition to its Powerfully Simple supply chain planning solution, ToolsGroup provides an outsourced service that feeds optimized inventory targets to companies to manage and respond to demand volatility. Companies can access ToolsGroup’s advanced inventory modeling and optimization engine for a monthly subscription fee.
Many companies collect detailed demand data, but don't possess the analytical tools to choose the right inventory targets to achieve their performance goals. ToolsGroup's new outsourcing offering provides these companies with a service that analyzes and understands their demand and supply uncertainty and calculates optimized inventory targets to achieve customer service levels objectives.
“Responding to the customer can be achieved with cost over-runs, excessive inventory and firefighting but to respond profitably means understanding the sources of volatility and planning for them appropriately,” explained Tim Payne, Research Director for Gartner Research in Hype Cycle for Supply Chain Management, August 2011.
Users can take advantage of ToolsGroup's advanced inventory modeling and optimization engine at their disposal. A secure cloud-based portal allows users to easily upload data and retrieve inventory recommendations. In addition, they get SKU-location level inventory targets—such as safety stocks and reorder points—for a low monthly cost. This approach allows companies to deploy optimized inventory targets using their current systems and processes. They can quickly deliver revenue, margin and cost reduction objectives while avoiding both capital expenditure and cost of ownership.
A typical user example of the new outsourced service is a North American fast moving consumer goods manufacturer which is optimizing 800 unique SKUs in a network of four plants and 60 distribution centers. Its challenges include seasonal capacity constraints and high demand volatility driven by promotions, media events and competition's activities. The service-based approach is helping it address immediate working capital and inventory objectives during a global ERP rollout.
Analyzing demand volatility to improve corporate performance demand volatility is cited by Gartner, IDC and other analyst firms as the number one obstacle identified by corporate executives to achieving their supply chain goals. But companies can overcome this obstacle by positioning the right inventory levels across the supply chain to absorb such volatility.
“Many companies need reliable inventory targets that will allow them to achieve their customer service and corporate performance goals, yet don't want to make a large upfront investment in software and infrastructure," said Joe Shamir, Chief Executive Officer, ToolsGroup. “ToolsGroup and our partners can help them extract the demand signal from the noise and set the right inventory targets to deliver these objectives.”