What is Inventory Optimization for Distributors?

Inventory optimization is the process of managing inventory levels to meet customer demand while avoiding stock-outs and inventory buildups.

Savvy distributors know that not managing inventory effectively can lead to storage, labor, and other costs. Inventory management today has become complex due to global supply chains that are vastly interconnected. Distributors must manage inventory levels across multiple locations to maintain available inventory, regardless of inventory positions in any one location.

What is the Process of Inventory Optimization?

The process of inventory optimization involves:

• analyzing and coordinating inventory replenishment orders with inventory items
• forecasting customer demand
• setting reorder points and order quantities
• ensuring adequate availability and minimizing inventory costs
• calculating optimal inventory levels for different categories of inventory items
• building in demand trends, supplier lead times, seasonal variations, and cost of holding inventory
• reviewing inventory performance against objectives on an ongoing basis

What is Inventory Optimization & Management Software?

Digital inventory optimization & management is key software that enables the process of optimization for distributors. It helps businesses identify current inventory performance and opportunities for improvement. It reduces cost and improves service levels by determining the most efficient inventory stocking levels for each distributor location.

What Are the Results of Using Inventory Optimization Software to Manage Inventory?

To comprehensively optimize inventory levels, distributors need visibility into their entire supply chain so they can accurately forecast customer demand and anticipate changes. This requires up-to-date real-time data on all inventory items including history of inventory movement, usage patterns, in material availability, inventory costs, and lead times.

Inventory optimization technology can help streamline inventory management and improve inventory performance by providing visibility into inventory movements and helping organizations to identify opportunities for improvement.

It provides detailed insights into inventory positions, forecasts future demand based on past trends, calculates optimal order quantities, establishes reorder points and replenishment strategies, predicts inventory needs across different locations in the supply chain, and helps to identify any potential bottlenecks or areas of risk. It also leverages extensive data points and AI to optimize effectively over thousands – or millions – of SKUs. This comprehensive view  allows organizations to better manage their inventory levels while saving time and money.

Inventory optimization is an important tool for modern wholesaling businesses to manage their inventory efficiently in an increasingly complex global supply chain. By utilizing inventory optimization & management technology, organizations can increase visibility into inventory movements, take control of inventory levels, and gain a competitive advantage in the market.

To learn more about AI-enabled Inventory Optimization & Management, reach out any time.