The way businesses manage their inventory is often piecemeal, ineffective, and based mostly on the purchaser’s intuition and experience. This can hinder both production and delivery, in addition to tying up large amounts of capital in inventory. The challenge for managers is to optimise them,  mostly by reducing their levels while making sure to smooth production, deliver on time, and improve the company’s financial indicators. To help you succeed, eso/es contains first-rate tools for working with stocks.

Your eso/es Inventory Optimisation Module gives you the answers to the following questions:

• Is our inventory in storage too high?
• Have we set our safety stocks correctly?
• Shall we rather define static or dynamic safety stocks to improve assortment?
• Up to what extent do our inventory requirements really suit the defined schedule?
• What would supplies behave like if the calculation parameters were changed?
• Was the selected inventory management methodology really observed in the previous period?
• Can we reduce inventory levels without compromising production or customer requirements?
• Can we spare resources using a different inventory management model? If so, what type?

A company’s inventory consists of hundreds and even thousands of items. For this reason, eso/es divides them into several groups after an ABC analysis. The different groups of stocks mostly follow different calculation schemes. For example, Q-system, P-system, Double push-down-list system.

In your eso/es, the inventory optimisation process is implemented in several steps:

• Historical Data Analysis (cost timeline, inventory level)
• Calculation of statistical parameters of consumption time series (mean value, difference)
• Selection of type of inventory management system based on defined parameters
• Recalculation of control parameter values (safety stock).

Based on the past behaviour of stocks (actual stock, actual consumption and issued stock), on the requirements and consumption plan, as well as on the identified need (either past or future), eso/es establishes stock behaviour according to the selected methodology, for the previous and/or following period. The resulting data is displayed graphically, making it easy to read and customise. It also compares the selected indicators, such as inventory level and turnover, and quantifies the potential savings in the monitored unit of measure and as well as in financial terms.

The eso/es Inventory Optimisation Module offers the following calculation methodology options:

• Inventory based on static security stock
• Inventory based on dynamic security stock
• Inventory based on planning reliability / MAD, MAPE, MSD (P-system) forecasting
• Inventory based on planning reliability / MAD, MAPE, and MSD forecasting, ensuring a 100% requirement fulfilment (P-system).

It goes without saying that the source data needed to simulate inventory can be obtained immediately and automatically from other eso/es modules (storage subsystem, product parameters, planning system).

Future planned consumption data can be obtained immediately and automatically from different planning models defined in eso/es - Strategic Planning, MRP, Business Plans, Forecasting, or by importing data from external sources.

When calculating inventory, eso/es can take into account different product parameters such as:

• Safety stock
• Delivery time
• Order lot
• Vendor reliability (by delivery fulfilment rate) and / or
• Planning reliability / forecasting.

The data can be broken down and divided into different simulation areas. Therefore, the same source data can be recalculated using different methodologies. The resulting comparison can be displayed accordingly.

In eso/es, managing inventory levels is not just a matter of intuition but, instead, a qualified process based on excellent calculation methods whose actual benefits can be quantified and expressed in financial terms.