1. ABCs of Inventory Planning
Jeffrey Porter
Chief Marketing Officer

2. Agenda Inventory planning introduction Approved stock list
Demand and forecast management
Safety stock | Inventory policy | service level
Stock replenishment
Inventory process
Measure inventory performance

3. Jeffrey Porter -- CMO
25 + years of hands-on experience developing solutions and processes for inventory planning and management within the distribution and manufacturing industries.
Systems consultant at Andersen Consulting until the early ’90s.
Manufacturing development Engineer at Hewlett- Packard
Founding staff member of RockySoft
16 years at the company.
Business Development, Sales, Service, CEO
Colorado State University
BS Engineering
MBA
CPM
6+ year member of Vistage, an executive coaching organization
StockIQ / Intelligent Supply Chain Planning /

4. Company Highlights
Supply Chain Planning software with consulting and implementation services
Targeted to mid-market distributors, manufacturers, and 3PLs
Headquarters: Broomfield, Colorado
Privately held
StockIQ / Intelligent Supply Chain Planning /

5. What We Do
Software tailored to the distribution, manufacturing, and 3PL industries
Integrated tools for operations planning, transforming the planning process into a powerful engine for maximizing revenue and service level
Inventory reporting solution to accelerate the Sales & Operations Planning processes (“S&OP”) and ensure timely collaboration among sales, marketing, supply chain, finance and partners
StockIQ / Intelligent Supply Chain Planning /

6. Industries We Serve Wholesale Distribution Manufacturing eCommerce
Food & Beverage
Multi location
Transfers
BOMs
Dependent demand
Integrate eCommerce platforms
Channel analysis
Expiring Inventory Alerts
Promotion Planning
3PL
Consumer Packaged Goods
Industrial Supply
Third Party Logistics
Retail
Customer Analysis
Drop Ship PO’s
Vendor tracking
Shipper/Client Logins
Warehouse Inventory Analysis
SKU categorization
Promo Planning
StockIQ / Intelligent Supply Chain Planning /

7. Inventory Planning Defined
Inventory planning involves determining when to order products and in what quantity. It includes all the activities of demand and replenishment planning.
What will my customers order?
When should a replenishment order be placed?
How much should be ordered?

8. Inventory planning goals
Maximize
Customer
Service
Minimize
Investment
And Costs

9. Does Inventory Guaranty Service?
“Based on discussions with companies found in Gartner's annual Supply Chain Top 25 rankings, we find that companies with the lowest inventories tend to also have the highest fulfillment rates. More inventory does not guarantee service and less inventory does not necessarily lead to service challenges. Survey results suggest that, if inventory has little correlation to service, other enablers, in addition to a good forecast, are required to manage both inventory and service.”
Demand Forecasting Leads the List of Challenges Impacting Customer Service Across Industries, Gartner, July 2016

10. Inventory Planning Benefits

11. Inventory planning challenges
Determining how much stock should be maintained on each product (possibly at different locations) to meet your customers expectations.
Understanding/anticipating your customers expectations of product availability.

12. 1) - Approved Stock List Separate stock from the stuff.
Develop a rigorous item approval process.

13. Approved Stock List

14. 2) Demand Planning
Demand Planning Objective: Produce a forecast of demand which reflects reality.
“Effective demand management plays a vital role in enabling supply chain to deliver high service at appropriate inventory levels and cost in an environment of extreme demand volatility.”
Take Seven Actions to Improve Demand Management Capability in Consumer Products, Gartner, November 2015

15. Sales History & Statistical Forecast

16. Keys to Effective Forecasting
Separate items with sporadic usage from those with recurring usage.
Correct for any unusual usage.
Inject marketing insight.
Measure forecast accuracy.

17. Separate Items with Recurring Usage

18. Inject Marketing & Sales Insight

19. Forecast Accuracy
”Forecast accuracy impacts important service metrics. Forecast accuracy along with order management capability are important enablers in developing end-to-end processes to improve customer fulfillment.”
Demand Forecasting Leads the List of Challenges Impacting Customer Service Across Industries, Gartner July 16
Reduce the risk of stock outs (customer disappointments) and excess inventory
Lower Forecast Error
Reduce the inventory investment in required safety stock
Productivity

20. Ask Customers or Sales to Forecast?
“The mistake organizations can make is that they ask sales for forecast input on everything they sell or don't ask them for a unit-level forecast at all. Neither is correct, and the answer lies somewhere in between. Simply rolling up inputs from the sales organization, for example, is not a demand plan, but a sales forecast.”
Take Seven Actions to Improve Demand Management Capability in Consumer Products, Gartner, November 2015

21. Ideal Forecast Approach
“Balance statistical modeling, ‘Statistical Forecasting’, techniques and collaborative inputs as part of the consensus demand, ‘Customer Centric’, plan to produce the best estimate of demand.”

22. 3) Safety Stock
Insurance against unusually high customer demand/forecast error and supplier shipment delays.
Is a buffer of inventory used to prevent stock outs.
Safety Stock is a business policy decision.

23. Service Level

24. 4) Replenish Stock
Reorder Point = (Anticipated Demand/Day * Projected Lead Time) + Safety Stock

25. 5) Inventory Process - Manage by Exception

26. 6) Measure Inventory Performance

27. Measure Inventory Performance

28. Service Level

29. Inventory Turns

30. Summary Reduced Inventory Increased Perfect Order Performance
Shorter Cycle Time
Improved Fill Rate
Improved ON-Time
Increased Perfect Order Performance
Less Expedites
Efficient Production Scheduling
Reduce the risk of stock outs (customer disappointments) and excess inventory
Lower Forecast Error
Reduce the inventory investment in required safety stock
Productivity

31. Thank You for attending!
Jeffrey Porter or
Intelligent
Supply Chain
Planning