Inventory Optimization

Not too much, not too little

Inventory optimization is all about maintaining the right amounts of inventory in the right places at the right time. Keep too much inventory and you'll have much higher stock holding costs, plus you'll lock up significant amounts of cash that could be used for better purposes. Keep too little inventory and you'll stock out and short customers. The tricky part is determining the amount that is just right.

As simple as possible, but not simpler

To buffer for the uncertainty in the demand and the uncertainty of supply, buffer inventory levels are determined. Spreadsheets and competing systems will use relatively simple formulas based on forecast error, desired service level and supply lead times. These typically leave out many factors that do impact the amount of safety stock needed, and result in much lower service levels than targeted. Those companies that do achieve targeted service levels, do so only through costly expediting, warehouse transfers, and breaking into frozen planning fences, not purely from safety stock. Their supply chain is in a constant state of emergency and planners spend much of their time fighting fires.

Better math for greater accuracy

Wahupa tackles this completely different. First the tradeoff between desired service levels and required stock levels to achieve it are determined. Due to the higher quality of the demand planning output, automatic calculation of supply uncertainty, and inclusion of many supply, inventory, and service policies, the understanding of this tradeoff is highly accurate.

Higher service AND lower cost

With this improved understanding an optimal balance is then determined between items and between locations. Not just traversing along a given curve, but pushing the efficiency curve way down.

Please Note: Inventory Optimization has not yet been released, but is on our product roadmap for the near future.