Excess inventory ties up working capital, reduces liquidity, and impacts profitability. However, industrial and retail companies rely on decade-old processes and IT-systems to manage their inventory. This process is largely manual, error-prone, and doesn’t leverage today’s technological capabilities. Maximum cost transparency is crucial to identify wide-ranging savings. Yet, it is often limited. Artificial intelligence (AI) is ideal for monitoring ever-changing material demand patterns and supporting people to focus on the exceptions. But to people managing thousands of materials, it is often not available. Real-time analytics could provide instant cost evaluations of intended actions, but real-time analytics again are often not available. Therefore, it is not surprising when proclaimed saving targets are not reached. Those saving targets are often pure fiction, a consequence of not enough software support. It is long overdue to rethink inventory management from the ground up. We did – and brought to life the Inventory Navigator software.
Inventory Navigator
Client challenges – Why it matters
Managing thousands of materials in a dynamic planning environment without adequate tool-support leads to significant manual effort, error-prone, and inefficient. Current IT- systems fail to shift the decision maker’s focus on the materials with the greatest leverage or immediate need for attention. In such an ever-changing environment, it is even challenging to sustain inventory reductions without significant manual efforts. Autonomous material planning – a declared vision for many industrial companies – seems far away, even though the necessary technological elements are already available today.
Logistics planners also lack the software and data-supported guidance on how to realize assumed inventory reduction potentials. Adjusting logistics parameter settings such as safety stocks, rounding values, and lot size methods requires instant information about the resulting financial impact. However, planners remain in the dark regarding the future cost of their actions at the time of implementation.
Thirdly, today’s inventory management is mainly driven by top-down defined cost reduction targets, which are not reconciling the individual contribution capabilities of the business entities. The inherent disconnect between management and operations leads to unrealistic goals for particular units and unambitious goals for others, obstructing possible bottom-line results.
Our approach – How it works
The BearingPoint Inventory Navigator offers a sustainable inventory optimization approach that creates transparency about savings potentials, creates full cost transparency for logistics planners and material managers to support their decision-making. It significantly reduces the manual planning effort by directing a planner’s attention to the exceptions. It is based on three steps:
Identify savings potentials
- Identification of any non-value-adding stock buffers and inventory composition
- Multi-level analysis of inventory health to identify focus areas and connect saving targets with meaningful potentials, bridging the gap between management and planners
Realize savings with AI-based analytics
- Real-time model of inventory-relevant processes supports real-time cost-simulations
- Transparency of the cost impact of logistics parameters for each material or group of material and organizational entity
- Holistic optimization of logistics costs using adaptive algorithms
Sustain inventory reduction
- Automated analytics pipeline offers real-time insights, alerts, and recommendations to sustain savings over the long run
- Foster holistic material planning by highlighting process inefficiencies and dissolving planning silos, especially between logistics and production
- Focus and management by exception by receiving notifications and recommendations about inventory-related inefficiencies in a user-friendly, modern workbench
Value proposition – Your benefits!
Optimizing inventory with BearingPoint’s Inventory Navigator can reduce inventory costs by more than 20%, releasing substantial liquidity. Simulating the relevant logistics parameters helps you achieve full cost transparency about your current inventory level drivers, improving and simplifying your logistics planning. With AI-based supervision, it allows you to manage by exception, focusing on pressing issues while bringing together the inventory-relevant departments. It establishes a clear link between management expectations and operative capabilities.
Especially in current times, this tool greatly supports our inventory management. Particularly the possibility for each planner to individually and independently investigate and control his parts is a great solution. We can easily find the desired results in order to act accordingly.
Lead Supply Chain Execution, Global Automotive Supplier
BearingPoint’s Inventory Navigator enables logistics planners to focus on high leverage areas, realizing and sustaining long-term achievements.
Demo
See for yourself and request a demo of the BearingPoint Inventory Navigator software.
