Supply Chain Software - itemPRO Inventory Optimizer

Is there a tool that can help me optimize my ERP?

Inventory Optimization
Inventory Optimized. Getty Images

Is your MRP system enough?  You might think so.  And those of us who were walking around with cell phones in early June of 2007 probably thought they were enough, too.  Then on June 29, 2007, the first generation iPhone went on sale.  And thus began the revolution.

Am I saying that your MRP is a flip phone (or, gaak, a Blackberry with hard buttons!) compared to what you could have?  Well, actually, yes I am.

With your cell phone, you might still be using the same carrier and have the same cell phone number that you had before your first iPhone purchase (or latest gen smart phone).  That's the parallel I'm drawing with regard to your MRP.  Imagine - keeping your same MRP system and same data but be part of the purchasing, planning and inventory optimization revolution.

That's the potential of itemPRO and other bolt on, cloud-based software tools.

If you're looking to optimize the performance of your MRP but don't want to invest the time or dollars into a new manufacturing and inventory management platform, you should consider tools like itemPRO, which is a cloud-based inventory optimization tool.  Software bolt-ons like these are designed to help you find the right balance between customer demand and product availability.  They allow you to access features such as self-adapting forecast algorithms and dynamic safety stock calculations (safety stocks are a result of lead times and demand – as your customer demand changes, shouldn’t your safety stock?).

  The result is a tool that your buyers and inventory control team can use to access cost optimized order proposals and forward-looking inventory management - and you don't have to change MRP systems.

I'm focusing on itemPRO in this article, but a quick web search of "cloud-based inventory optimization software" will give you a wider view of the landscape.

  My intention is that this article shows you the possibility that itemPRO and its counterparts can offer.

Self-Adapting Forecasts

Successful inventory management relies on precise demand estimation.  These cloud-based inventory optimization tools can analyze every SKU in your warehouse, using historic shipments, to conduct time series studies and identify seasonality, trends and other outliers.  With itemPRO, these calculations are run on a daily basis to make sure buying decisions are made with current data at your disposal.

Dynamic Safety Stock Calculation

Safety stocks are calculated using several factors.  How accurate is your forecast?  itemPRO can review actual replenishment lead times to tell you.  And just how reliable are your suppliers?  The data in your MRP can tell you.  Your safety stock calculations need to be adjusted as your lead times and demand changes.  itemPRO eliminates the need to maintain safety stock levels manually.

Cost-Optimization

With itemPRO, your buyers’ purchase orders are calculated in a cost efficient manner.  itemPRO looks at your minimum order quantities (MOQ), units per package, order costs, purchase prices, service levels and lead times – as well as your dynamic safety stocks – and then calculates purchase order proposals – saving your company money by optimizing your buyers’ purchase order proposals.

 

As a cloud-based software tool, itemPRO is a complementary add-on that interfaces with your MRP.  itemPrO receives your system data and uses algorithms designed to calculate optimal order proposals. 

This allows itemPRO and other cloud-based inventory optimization tools to help you to prioritize your buyers' daily activity.  It makes the time-consuming completion of routine tasks a thing of the past, as itemPRO identifies which purchase orders proposals are driven by normal demand and meet standard lead time requirements.  Those mundane purchase order proposals can be released with just a few clicks, which allows your buyers to spend their time optimizing your supply chain and solving critical situations. 

Would it be helpful for your warehouse and inventory teams to identify potential stock outs ahead of time and react in a timely manner?

  Using your own system’s data, these cloud-based inventory optimization tools help you direct your inventory team’s attention to critical stock situations. 

Not only do these tools provide your buyers with cost-optimized purchase order proposals, they help your teams determine optimal stock levels within your warehouse, to help keep downstream service levels on target.

And while you might be able to use your MRP to calculate the same things that itemPRO can do – itemPRO can do those calcuations for you.  itemPRO uses intelligent, self-adapting math to choose calculate new demand, lead time and supplier reliability information – so that data is provided to you and that data maintenance is done using automation. 

A company's supply chain goal should always be to optimize it by delivering your customers what they want, when they want it – and by spending as little money as possible.  itemPRO and other cloud-based inventory tools aren't free, so it's best to do your own cost-benefit analysis.  But if you think you need to move your MRP from the flip phone era to the smart phone future, it's worth a look.