Having the right inventory and equipment on hand drives improved business performance, yet many organizations are stuck in old-age methods of managing inventory. To streamline inventory planning and have parts on hand only when they’re needed, executives should invest in cloud-based inventory management software. Dave Cook, CEO of Right Sized Inventory, says out with the old spreadsheets that are held in a silo and in with cloud technology based on data analysis to determine optimal inventory levels. Here, Cook explains why inventory planning solutions are valuable.
How do cloud-based inventory management solutions solve problems of legacy solutions?
Most legacy solutions don’t provide any analysis of what on-hand inventory should be. The solutions provide a lot of inventory management functionality to help you plan replenishment, execute replenishment triggers, kick off work orders, pack and ship, but they leave it up to you to define what the targeted inventory level should be. There is a broad market deficiency, due to two factors: most of the legacy solutions don’t have good enough technology to add value to the business, or the solutions are too expensive.
For example, demand-driven mechanisms have become very common. Those mechanisms work pretty well in a variety of different solutions, but they’ll leave it up to you what the appropriate level should be.
Most companies that are operating that way don’t have tools to analyze what those levels should be. They’ll create a spreadsheet, which isn’t the most robust and can be difficult to share across users since they don’t understand the formulas you’ve made. A spreadsheet can’t do the same level of analysis as a software tool. Cloud technology and the power of connected servers enables processing power to find the optimal inventory level.
How have companies seen their business performance change as a result of using cloud-based inventory planning software?
The two most significant improvements are reduction of excess inventory, which puts cash back in their pocket and lets them to have an overall leaner working capital profile; and reduction of insufficient inventory, which limits stockouts and potential customer service crises. Apart from those two, companies can clearly see the documentation of the analyses and the results. There is common visibility among all users, which gives everyone more confidence in the analysis going on.