techwatch
Getting the big-picture
view of inventory
AS MORE COMPANIES WRESTLE WITH MAINTAINING JUST
the right amount of inventory across the supply chain, they’re turning
to software for help. Specifically, they’re investing in inventory optimization solutions, applications designed to help users calibrate stocking levels to their precise needs. Nearly a quarter of the respondents to
a recent DC VELOCITY survey said they planned to buy inventory optimization (IO) software in 2013, making IO software second only to
warehouse management systems on the list of proposed purchases.
That’s a notable change from past surveys, when transportation management software typically claimed the number-two spot on the list.
What’s behind the surge of interest in software for inventory optimization? “A combination of tight capital requiring
maximum utilization of inventory assets and the
need of retailers and wholesalers to satisfy needs
across multiple buying channels from inventory at
every source point,” says Eddie Capel, chief executive officer of Manhattan Associates, one of the
many providers of this type of software.
“Companies need to optimize inventory.”
In fact, a host of companies across an array of
industries have begun deploying software to man-
age inventory held at multiple points in the supply
chain. Players in the high-tech, consumer packaged
goods, pharmaceutical, and industrial manufactur-
ing sectors are all starting to install this type of solu-
tion, says Gartner Research Director Tim Payne.
“Inventory optimization tools are not really indus-
try-specific, so they can be used in most verticals,” says Payne. “The
main distinction between the different tools is whether they can do
just finished goods or can go back into manufacturing and consider
WIP [work in process] and RMS [raw material supply] as well.”
What’s also helping sales along is that the applications have matured
and now have a proven track record of operational benefits. “A few
years ago, inventory optimization was still considered an ‘early
adopter’ technology used by only a few leading-edge companies,” says
Patrick Smith, managing director North America at ToolsGroup,
which develops this kind of software. “The technology has become
easy to use, install, and maintain, with a commensurate [drop in the]
total cost of ownership.” In addition to ToolsGroup and Manhattan,
other well-known providers of this software include Barloworld, IBM,
Logility, SAP, SmartOps, and TCLogic.
Another reason for the increased interest is that companies are tak-
ing a more holistic view of supply chain invento-
ry, and today’s solutions can support that
approach. Most software packages out there are
“multiechelon,” meaning they look at inventory
levels across all stocking locations.
