Inventory Optimization

If you are operating a supply chain, you have the challenge of keeping your inventory costs as low as possible while providing the required customer service level. You also need to consider contingency cases with increased demand or discrepancies in supply. anyLogistix (ALX) is the inventory planning and optimization software tool that will help you find solutions for cutting costs without sacrificing service level by experimenting with a computer model of your supply chain. This software tool is used for testing various inventory policies and calculating balanced combinations of policy parameters.

ALX enables you to conduct single-echelon or multi-echelon supply chain inventory optimization. With ALX, you are able to:

  • Cut inventory carrying costs, including storage and labor expenditures
  • Release short-term capital
  • Boost inventory turnover
  • Increase customer service level
  • Reduce obsolete inventory rates

Simulation-Based Inventory Optimization

Take into account randomness

Simulation models can consider randomly varying parameters, including transportation and production lead times, demand per product, changes in order quantities, and more. Using real stochastic values in all of these metrics, instead of averages, allows you to catch complex interdependencies between them. This provides you with a deeper insight to which factors are driving up your costs, and what policy changes are needed for lean and risk-free inventory planning.

Model with a greater level of detail

ALX’s unique simulation modeling capability allows you to capture the supply chain design as is: models are extendable and can include all tiers of your network at a required level of detail. For example, sometimes high raw materials inventory costs are driven by certain processes at production that are difficult to discover. With ALX, you are able to model your manufacturing site at the level of work stations, shifts, and pieces of equipment to see where exactly the bottleneck is, and what is inflating your stock.

The same goes for disturbances in transportation lead times and sourcing plans. Finding inventory drivers may be especially difficult for products with complex BOMs and multiple links between production sites. This is where detailed simulation modeling can help determine sources of anomalies and provide a basis for inventory optimization.

All of this cannot be achieved with traditional analytical inventory optimization software tools that do not use simulation modeling.

Simulate what-if scenarios

With ALX, you can test any emergency scenario to see what your inventory will be in these cases. For example, you could simulate the bankruptcy of a major supplier, a transportation price leap, an unexpected demand increase, etc. You are able to see how your network would be affected by the event and adjust your inventory plans accordingly.

Multi-Echelon Inventory Planning

If you are operating a network with multiple tiers, you may choose an approach to manage and optimize inventory levels across your whole end-to-end supply chain.

For example, an ALX simulation model can help you better understand interdependencies between customer service level and stock-outs in packing materials inventory at factories. Or, it can assist you in finding out the influence of end-customer demand fluctuations on ordering across multiple tiers of the supply chain. ALX can help you identify bullwhip effect consequences in your network and see how you can overcome them.

Keeping inventory levels low while satisfying demand and optimizing risk is a major challenge for supply chain managers. Use simulation models to gain insight into the interrelations in your supply chain and improve profitability through optimization.

Tools to Conduct True Multi-Echelon Inventory Optimization

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