In a world where demand is more uncertain than ever, and inventory costs weigh heavily on companies’ budgets, supply chain control tower platforms are the most promising technology for better inventory optimization.
Supply chain control tower platforms: An introduction
More and more companies are turning to supply chain control tower platforms to improve their supply chain efficiency, visibility, and resilience. This solution combines data, people, processes, technology, and infrastructure to navigate disruptions and increase enterprise value.
We have talked extensively about supply chain control towers, but here is a short introduction in case you need it.
A supply chain control tower platform is a centralized, cloud-based system that automatically collects and integrates data from the entire supply chain to provide actionable insights, real-time alerts, and data-driven suggestions.
According to Accenture, control towers offer benefits that can be divided into two categories:
Financial benefits:
- Up to 1% increase in revenue through reduced lost sales;
- Decrease in logistics costs by 3-5%;
- Labor efficiency improvement by up to 20%;
- 5-15% reduction in inventory through better inventory planning
Strategic benefits:
- Becoming a data-driven company with improved decision-making;
- Increasing service levels, thus leading to higher customer satisfaction;
- Improving operations with automation and risk management;
- Enhancing accuracy in supply chain demand forecasting.
Supply chain control tower platforms help managers better organize and optimize all aspects of the supply chain, from production to delivery. This article will focus on how they can be the key to overcoming the most pressing inventory management challenges that companies face nowadays.
Which challenges do executives face when it comes to stock management?
Inventory management challenges are not unusual. Every supply chain manager knows the pressure of ensuring their inventory meets customer demand without stockouts and excessive surplus.
Inventory management is the process of tracking a good through the entire supply chain and involves four different operations:
- Tracking inventory levels to make sure they’re always optimized;
- Predicting consumer demand for each product;
- Strategically allocating goods and materials throughout the company’s distribution network;
- Replenishing warehouses when needed.
In the last years, it has become more and more evident how data can help companies improve their inventory management efforts. In particular, supply chain demand forecasting plays the biggest role in inventory optimization to cut costs and improve service levels.
The impact of supply chain demand forecasting
Demand forecasting is the analytics process of estimating how many products consumers will order and adjusting production and inventory levels accordingly.
It helps executives make informed and data-driven decisions regarding production, inventory management, and resource allocation to meet customer demand, reduce costs, and maximize profits.
However, planning based on forecasts and historical data is no longer enough in the current scenario: chief supply chain executives worldwide are starting to leverage the power of supply chain control tower platforms to supercharge their demand forecasting capabilities.
Using control towers for inventory optimization and management
We live in times of extreme unpredictability. Since the pandemic, demand uncertainty has been wrecking the global supply chain and giving many headaches to executives worldwide. And causing costs to rise, too:
In these times of uncertainty, companies need to centralize inventory control to reduce these costs.
Supply chain control tower platforms are emerging as the next-generation inventory management tool, offering visibility, analytics, and automation. Thanks to cutting-edge technology like machine learning algorithms and AI-powered data analytics, control towers can boost companies’ forecasting capabilities, making accurate out-of-stock predictions and tracking inventory levels at all times.
This directly benefits the company: just a 2% improvement in on-shelf availability is worth 1% in increased retail sales. (Source: Tredence)
And it doesn’t end here: control towers work wonders for assortment optimization, too, because thanks to their advanced analytics capabilities, they can calculate the perfect product mix in the proper distribution channels at the right time.
Toward the future of supply chain management
Inventory and assortment optimization aren’t new practices, but as the world grows more and more complex, the bar for forecasting & planning keeps rising. To quote McKinsey, “Companies need accurate and granular data-driven insights on how consumers shop and make purchasing decisions to make informed decisions on their category assortment.”
And those accurate and granular data-driven insights are provided only by supply chain control tower platforms. With their ability to collect enormous amounts of data from different sources and analyze them in real time, they offer the path to become data-driven to those companies bold enough to leap.
