Slimstock. Wim Van Loo. Five ways to free working capital from your inventory. Steven Pauly

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Frederick Murphy
6 years ago
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1 Wim Van Loo Slimstock Steven Pauly Five ways to free working capital from your inventory 1

2 Global support 6,000 users 200 professionals 700 customers 96% retention Customers in countries Offices in countries Innovate, create, trigger & inspire Transfer knowledge and know-how Implement and support Slimstock research Whitepapers Gaming Slimstock Academy Train & challenge Roadmap to excellence Portfolio management Demand planning Inventory optimisation 2

3 Service Level Stock Turn Reduced obsolete risk Build on existing high levels of service whilst reducing firefighting Reduce days on hand & increase shelf life Less shrinkage Better control of perishable items 3

4 Better inventory with less working capital 4

5 The biggest opportunity to improve working capital is in the area of inventory reduction. As levers of financial management go, none bears more weight than working capital. The viability of every business activity rests on daily changes in receivables, inventory and payables. 5

Classify through demand profiling Allocate models and methods Create forecast and demand plan Calculate inventory parameters Optimise replenishment Processes mastered by Slim4 Analyses demand

6 Classify through demand profiling Allocate models and methods Create forecast and demand plan Calculate inventory parameters Optimise replenishment Processes mastered by Slim4 Analyses demand patterns on all levels On item level and product families Uses ABC/XYZ to segment Multi Echelon and multi-channel Allocates correct statistical models and techniques automatically Integrates forecasting with inventory management Supports collaborative forecasting Base forecast: average, trend, season, promotions, supersession, NPI, PLC Generates forecast exceptions Daily review of forecast versus confirmed orders Inventory methods based on selected forecast models Service level driven Dynamic, automatic buffer calculations Economic Order Quantities Calculates economic shipments Matches supplier conditions with order Purchase forecast results in predictable inventory levels Framework contract User actions based on management by exception Creates overview Selection through categories Forecast review Pro-active instead of reactive Expedite and postpone Urgency versus importance Dashboard What-if analysis Aggregation EOQ calculations Structure the trade-off: frequency versus volume ABC/XYZ Integration with custom-made ERP systems is also possible 6

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8 We can safely state that our implementation methodology works Preparation & Interface Mile stone 1 Training on the job Mile stone 3 Optimisation Kickoff Installation Mile stone 2 Intake & logistic blueprint Interface specification Interface programming (by customer) Interface testing Set-up Slim4 Training L I V E Customer care timeline 8

the system 1 Article classification Each item

Automatic forecast based on seasonality, trends

Service level driven based on ABC and business

9 From strategy to execution Focus on standardisation processes Capture processes in the system 1 Article classification Each item needs different statistics 2 Optimal forecast Automatic forecast based on seasonality, trends and PLC 3 Order Level: Forecast + Safety Stock Service level driven based on ABC and business rules 4 Economic Ordering Optimisation per item (EOQ) and per order 9

10 Forecast based on Human input Demand class Trend External influencers Season Internal influencers Promotions PLC 10

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12 Inventory value must lower! How to address capital and risk? 6 square model NEW ACTIVE End of life Stocked driven 10% 30% 2% 10% 30% 80% Order driven 100% 100% 100% 12

13 A B C A X X Y B X Y Z C Y Z Z The Economical Order Quantity EOQ = Total Costs D O h P Purchase Price (Inventory) Holding Costs Order Costs Order Quantity EOQ 13

14 Benchmark holding and order costs Slimstock research(n=98) Industry Holding costs % Order costs Wholesale 22% 53 Retail 20% 20 Production 14% 30 Spare-parts 32% 75 On Average 22% 45 1 Enables better forecasting 2 Provides more insights in S & OP 3 Provides support to strategical decisions 14

15 20-30% inventory reduction Increase availability and decrease inventory Structured processes 50% increase in efficiency Clear priorities: focus on the right articles User friendly Up-to-date parameters Work becomes transferrable 15

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Role of Inventory in the Supply Chain. Inventory categories. Inventory management

Inventory management Role of Inventory in the Supply Chain Improve Matching of Supply and Demand Improved Forecasting Reduce Material Flow Time Reduce Waiting Time Reduce Buffer Inventory Economies of