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Ann Cumming

Where is your company on the Inventory Maturity Curve?


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Inventory is the foundation and lifeblood of any supply chain business. If your inventory is not in a healthy and stable state, cracks will soon appear. If left unattended, the cracks deepen, causing significant problems and disruptions in your business. Smarter inventory management not only frees up your working capital to use elsewhere in the business; it also gives you more time to focus on growing your business. Reductions in excess stock and minimizing stock shortages lead to more sales, happier customers, and reduced pressure on logistics. 

So, if inventory is the foundation of your business, doesn't it make sense that it should be your prime concern and focus? Should you not be looking at ways to improve efficiencies in this area?

Having a clear understanding of where you are on the Inventory Maturity Curve is the first step to knowing where you should be aiming if you want to remain a successful and competitive business.

 

 Level 1 – manual inventory management (Static)

 You are at Level 1 when:

  • You are using spreadsheets to manage your inventory.
  • There may be a repository for sharing information with your teams
  • Analyzing data is mostly manual and time-consuming.
  • No ability to gather data intelligence to allow predictive or proactive capabilities.

 

Challenges experienced at this level:

  • Your employees spend more time putting out fires than being proactive.
  • Your data is static and is instantly outdated.
  • No intelligence from an ERP solution to assist with supply and demand.
  • No data to provide predictive analysis.
  • No monitoring or built-in Alerts to signal shortages, excess, or stock availability at other locations.
  • It's challenging to obtain a single version of the truth as multiple versions/systems exist.
  • There is data duplication resulting in inefficient use of employees' time.

 Level 2 – enabled inventory (Connected)

 You are at Level 2 when:

  • You are still using spreadsheets, but you've spent a lot of time doing custom-built macros and databases to organize the data.
  • These systems provide some visibility into your current inventory levels.
  • Still mostly manual data analysis.
  • You may have a single repository for sharing information between employees.
  • No predictive or proactive insights.

 

Challenges experienced at this level include:

  • Limited functionality
  • Lack of AI and BI data to effectively manage your inventory
  • Macros in spreadsheets are sensitive to change and break easily
  • Lack of flexibility – new products and plans cause chaos and are impossible to plan

 Level 3 – auto-replenishment enabled inventory (Reactive)

 You are at Level 3 when:

  • You have visuals on dashboards, scorecards, and other KPI's.
  • Your supply chain data is stored in an ERP system.
  • A repository of data intelligence now exists to enable quicker decisions to be made.

 

Challenges experienced at this level include:

  • BI tools within your ERP are not specifically designed for Inventory management and don't take advantage of industry best practices.
  • IT and other resources are needed to make any small changes and to develop and maintain.
  • There is still no predictive or proactive capabilities.
  • Limited collaboration.

Level 4 – planning and forecast – driven inventory management (Proactive)

You are at Level 4 when:

  • Your inventory data is maintained and analyzed using analytics software specifically for inventory management.
  • You now have predictive analytics or even artificial intelligence tools to enable you to prioritize tasks effectively.
  • Your inventory control data is in your ERP and other data sources.
  • Connects your people, sites and disparate ERP systems to pull all inventory data into one place

 

Challenges experienced at this level may include:

  • Change management to a complete solution may cause issues

 Level 5 – actionable insights – driven inventory management (Predictive)

 You are at Level 5 when:

  • Your inventory data is maintained and analyzed using analytics solutions with features designed explicitly for inventory optimization
  • Predictive analytics, AI, or machine learning that enables you to prioritize your most critical inventory issues.
  • Connects multiple people, sites, algorithms, and disparate ERP systems to pull all inventory data into one place

 

Levels 4 and 5 represent the best of both the present and the future and incorporate AI, BI, Machine learning, IoT, and more. Tragically though, the majority of companies are still stumbling about in the first two levels of the curve and, as such, will never truly scale their business to any meaningful degree. By evolving to the higher levels on the curve, your business will undoubtedly see the following improvements. 

 

  • Balanced inventory – more cash
  • Improved availability – increased sales
  • Staff productivity improvements – creating the capacity to do more 
  • Improved forecasts 
  • Provides visibility of what needs attention

 

The most exciting part about implementing a robust inventory management system is that it doesn't have to cost you a fortune. We have priced our NETSTOCK solution so that it is affordable for any size company as the monthly SaaS fee is calculated on your inventory value. In our experience, our customers see an ROI within a few short months and they see an increase in employee efficiency and productivity.

 

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