FEATURE LOGISTICS
INVENTORY OPTIMISATION leads to supply chain success
Matching supply volumes with customer demand while keeping costs down presents a huge challenge. Gursh Atwal of AEB (International) advises on how to choose the right strategy
T
oday’s markets are subject to globalisation, volatility, economic
uncertainty and constant changes in demand channels and distribution strategies. This presents companies with tremendous challenges to match increasing supply volumes and product ranges to customer demand while keeping overall costs down. The amount of inventory can be a significant cost factor based on its cost and that of shipping, handling and storage. Inventory optimisation is ultimately aimed at achieving financial savings, improving operational efficiency, addressing demand volatility and supply variability and increasing overall customer service levels. It can have a staggering impact on supply chain dynamics and performance, resulting in the reduction of company cash in inventory which affects the balance sheet and improves cash flow. Choosing the right strategy depends as
much on the operations, warehousing and distribution methods of a business as on the type of company and its position within the overall supply chain. Whatever the approach a key factor to consider is having the right IT systems in place to support the operational side including warehouse and transport management and the strategic side with analyses, business intelligence (BI) and collaborative visibility tools. Multiple objectives need to be balanced including capital investment, cash flow, meeting customer demand, supplying the production line and supporting demand
fluctuations. In order to be able to react to market demand and supply chain disruptions and proactively plan for resource deployment, expansions and daily business, companies require visibility of what has happened, what is happening now, what is likely to happen and what possible alternatives exist. First steps toward optimising inventory levels include the recording and monitoring of data such as demand across products ranges, seasonal fluctuations, supplier lead times, completion of supplier deliveries and changes in order volumes. This typically involves the implementation of a warehouse management system (WMS) to standardise, accelerate and automate processes. Integrated WMS streamline operations increase efficiency and reduce error rates, giving control of the stock to the work force. They provide full visibility of inventory levels and can be used to notify suppliers and carriers when there is a demand for stock or services.
MINIMUM STOCK This helps to consolidate and time deliveries and reduces inventory levels to hold only the minimum stock required, allowing both management and warehouse staff to focus on their core tasks. Such integrated systems support strategies including vendor management inventory (VMI), just-in-time refills and demand driven fulfilment. They are often accompanied by a visibility solution that captures the required data throughout the supply chain to analyse the inventory
ROUTING AND SCHEDULING SOLUTION CUTS COSTS
Calor is using Paragon’s Multi Depot system to schedule deliveries of bulk gas tanks using specialist crane vehicles managed by its engineering division CalorForce. The schedule incorporates tank collections and relocations. As a result of implementing the solution CalorForce has halved the admin workload of its crane vehicle scheduling operation. Following its successful implementation for scheduling Calor’s gas cylinder deliveries CalorForce decided to bring more crane vehicle operations in-house. “We saw the capabilities of the software and realised it was exactly what we were looking for,” says installation supervisor Tom Badhams. “Even though it’s a relatively small fleet these crane vehicles are costly to run so it is very important that we use them efficiently. The system takes into account the vehicle restrictions and optimises the route accordingly.” Calor now schedules deliveries for six crane vehicles which takes one planner the same amount of time
as it did to schedule two vehicles prior to implementing Paragon’s solution. Paragon
T: 01306 732600 S14 JULY/AUGUST 2014 | MATERIALS HANDLING & LOGISTICS
www.paragonrouting.com/uk Enter 314
in real time and determine what levels are appropriate to cater for current market demand. Resulting measures include the reduction of stock that is obsolete, has short lead times or held to maintain operations for a specific time period. Depending on the size of the company, the complexity of the supply chain and the range of products offered, the return on investments needs to be carefully evaluated before selecting a WMS. Most technologies are part of a solution suite that covers all areas of the supply chain including the central WMS and order, customs, transport and risk management. For comprehensive inventory optimisation it is important to closely integrate all areas of the supply chain and include data from all systems involved, both internal and external. Visibility solutions provide tools to connect supply chain partners, analyse and categorise demand, allowing accurate simulation and modeling of inventory plans and cater for various strategies including optimal safety stock, promotional stock and seasonal variations. They use complex algorithms for assessment and forecasting, provide transparency on recommended stock levels and determine what should be held and replenished when, where, how and by whom. Supply chain simulations help to validate new strategies by predicting service rates, inventory levels and site capacity constraints for different structures prior to implementation. Which technology is deployed to optimise inventory ultimately depends on a company’s individual requirements and goals; there is no ‘one-size-fits-all’ solution. That’s why it’s crucial that the solution provider offers a consultative approach and a comprehensive portfolio and understands the specific needs of each supply chain sector, operation and perspective. They should offer an outside view and ask the right questions, assisting in-house teams to design improved workflows, cut waste and increase efficiency.
AEB (International) T: 01926 801250
www.aeb-international.co.uk Enter 315
/ MATERIALSHANDLINGLOGISTICS
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57