Traditionally Sales & Operational Planning process starts with a demand review followed by a supply review and pre-S&OP review and ends with an executive review. However economic uncertainties and escalating customer expectations have enforced enterprise to look at multi-stages of inventory optimization with reduced working capital to deliver better customer service.
Such Inventory optimization can happen at the raw material level, work-in-progress level, finished goods level or even supplier managed inventories; hence the majority of the organizations have added Inventory review as an important step in the S&OP process.
VisionTree implements SAP Integrated Business Planning (SAP IBP) for Inventory Optimization whereby the inventory review process includes data validation of various inputs from the demand, supply, and production side by the global inventory planner at a global level and by the local inventory planner at the local location level. The global and local inventory planners reach a consensus to finalize the inventory plan.
Traditionally, Inventory targets at one location affect and are affected by, targets at different locations. But if those targets are out of sync with your business needs, excess safety stock at multiple locations can result in costly inventory inefficiencies across the supply chain. To minimize the need for excess stock, SAP IBP for inventory offers a speculative multistage model that solves multiple mathematical equations simultaneously to reveal optimal inventory targets.
SAP IBP for Inventory offers the following key transformation benefits:
- 5-10% increase in order fill rates and on time delivery
- 18-48% reduction in out of stocks and order lead time variability
- 11-30% reduction in inventory and working capital
- 18-41% reduction in inventory carrying and obsolescence costs
- 10-26% reduction time spent on manual inventory planning processes
- 10-20% reduction in PPE and depreciation due to excess storage facilities