Inventory Optimisation

Inventory Optimisation - Reduction of Inventory Levels While Simultaneously Increasing their Availability

Inventories represent a central component of value creation and market supply within companies. They play a key role in ensuring smooth production processes and enabling short-term customer deliveries. At the same time, inventories serve as a strategic instrument for managing uncertainties in the supply chain. However, they also tie up capital, space, and storage equipment, incur costs, and ultimately impact the company’s financial performance.

Through precise inventory management, you can make your stock levels more efficient and cost-effective. With our tailored support, we develop strategies to optimize your inventory that help you improve your cost structure while ensuring the desired service level and availability performance.

Services provided by ebp-consulting in inventory optimization:

Analysis and visualization of the consumption behaviour of items/ products/ SKUs and identification of potential by means of modern big data analytics tools
Systematic classification of items/ products/ SKUs, taking into account their consumption patterns and demand fluctuations
Definition of item-specific inventory and replenishment strategies
Determination of the optimal service level and availability target for each item/ product/ SKU
Identification of a suitable approach for determining safety stock levels
Development of guidelines and rule sets for calculating optimal planning parameters (safety stock, working stock, reorder points, maximum stock levels, etc.), considering classical factors such as lead-time, lot size, rounding value, delivery frequency, and required service level
Identification of dead stock and inventory cleanup
Simulation of different inventory scenarios and their impact on inventory levels, inventory value, and capital tie-up costs
Development of company-specific training concepts and training of planners and material controllers within the organization

Inventory optimization as a path to higher efficiency and customer satisfaction

Our experience from numerous national and international projects across various industries has repeatedly shown that many companies face high inventory levels while simultaneously struggling with stockouts of the "right" items. In most cases, the root cause for this mismatch lies in the lack of systematic inventory planning leading to the accumulation of stock of “wrong” products and shortages in other products. Often, all items and products are planned using blanket approaches, without adequately considering their specific demand behaviour. There is a lack of company-specific concepts that provide planners and material controllers with simplified procedures or systematic methods for calculating planning parameters and right stock levels.

ebp-consulting has developed a concept that integrates complex planning approaches into a structured process model, providing planners with a simplified "recipe" for determining optimal inventory levels. This methodology is embedded in an Excel-based ebp tool that enables the simulation and analysis of various inventory strategies, as well as the determination of optimal planning parameters at the item/product/SKU level. The results can then be easily transferred into common planning systems such as SAP, Navision, or other planning add-ons.

Various parameters can be taken into account in the ebp tool to determine the optimal safety stock, optimal reorder point, optimal average inventory level, and thus the target inventory turnover rate for all item groups or for each item class.

Figure: Deployment areas of ebp’s tool-based approach for inventory optimisation

Benefits for your company through inventory optimisation with ebp-consulting

Optimisation of inventory levels while simultaneously increasing item availability
Increase in customer satisfaction and loyalty
Reduction of lost sales
Optimisation/reduction of capital and space requirements
Reduction of firefighting actions caused by stockouts and overstocks
Reduction of scrapping dead stock and the associated costs
Development of know-how regarding modern planning methods within the company
Standardisation of planning processes
Creation of transparency and reduction/elimination of dependency on individual employees’ implicit knowledge

Further consulting focus areas in supply chain management:

Network optimisation
Center of gravity analysis

Design of distribution networks

Definition of distribution locations

Design of procurement networks

Implementation of range strategies and stock-optimised inventory management for merchandise distribution

Definition of inventory strategies

Definition of inventory strategies and depths

Design of production networks and assignment of value added scopes

Creation and comparative assessment of network scenarios

Design of value chains

Outsourcing of production to other locations and suppliers

Simulation of networks with tools

Tool based supply chain design
Transport optimisation
Creation of transport cost transparency

Definition of the transport network

Tool-based transport planning

Tactical route planning

Route planning / route planning

Transport mode planning

Optimisation of transport means utilisation

Design of trimodal transport concepts

Optimisation of transport concepts, e.g. through regional forwarding, milk runs, trans-shipment traffic

Cargo hold optimisation

Benchmarking of transport/freight costs

Freight cost controlling

Introduction of control tower for central transport scheduling and control

Green logistics, implementation of CO2-optimised transport concepts
Make or Buy
Performing process mapping and data analysis

Estimating potential (cost savings and optimizations)

Defining quality requirements

Performing a risk assessment

Strategy evaluation and developing a strategic decision template for make or buy

Performing a network analysis in the event of sensible adjustments to supply chain structures

Planning the warehouse / logistics center in the event of insourcing logistics service providers

Supporting the entire insourcing process

Preparing and conducting the tender in the event of outsourcing

Supporting the outsourcing and coaching the logistics service provider in the start-up process
Sales & Operations Planning
Optimisation of requirements forecasts/forecasting and demand planning

Introduction/optimisation of sales & operations planning (S&OP)

OTIF optimisation

Introduction of new materials planning methods

Optimisation of replenishment and stocking processes

Specification of requirements and selection of SCM and APS software systems

Optimisation of SCM-IT systems such as SAP-APO

Introduction of indicator systems (KPI, SCOR model)

Control of the supply chain by an order team

Introduction of SCM team structures

SCM training using the Beer Distribution Game
SCM strategy
Development of company specific SCM strategies

Design of a big picture for planning and control processes

Definition of value-added strategies within the production network

Design of postponement strategies

Definition of integration strategies for suppliers and distribution partners

Introduction of variant management and synchronisation with the SCM
Purchasing consulting & supplier management
Supplier relationship management (SRM)

Supplier assessment and auditing

Establishment of supplier controlling

Supplier development and qualification

Supplier connectivity for procurements

Supply chain risk management

Requirements specification and selection of SRM tools

Supplier meetings and negotiations

Definition and implementation of cost-saving projects

Definition of negotiation strategies

Preparation and execution of material group/supplier days

Development of framework agreements

Preparation and execution of online auctions

Project references of ebp-consulting with focus on inventory planning and optimisation:

Development and implementation of specific application concepts for inventory optimisation in multi-tier distribution networks for finished products of companies across various sectors: :
- Leading manufacturer of industrial packaged gases
- Major supplier to the furniture and kitchen industry
- Manufacturer of electronic devices
- Renowned retail group for fastening and assembly technology
- Manufacturer of medical products and equipment
- Wholesale company for cable solutions

Planning and optimisation of purchased parts, production components, and packaging materials for numerous companies:
- Determination of optimal inventory levels and adjustment of planning principles at automotive suppliers
- Definition and implementation of an inventory and production strategy at a manufacturer of chemical cleaning and pharmaceutical disinfectant products
- Development and implementation of an inventory planning concept at a leading manufacturer of confectionery and herbal products

Planning and optimisation in the area of spare parts supply and service for various companies:
- Development and implementation of a systematic concept for spare parts inventory planning at numerous machinery manufacturers
- Analysis and optimisation of maintenance parts, work equipment, tools, auxiliary and operating materials inventory at a leading automotive manufacturer
- Global reorganisation of spare parts inventories at a machinery manufacturing company