To address the challenge of increasingly complex supply chains, IBM this week introduced a new inventory optimization solution as part of its Smarter Commerce initiative.
The product is called ILOG Inventory and Product Flow Analyst (IPFA) and it includes a new simulation capability that enables companies to more quickly and efficiently analyze safety stock levels to ensure forecasted inventory levels will meet customer demand. The goal is enhance optimization and sensitivity analysis to bring more confidence to the recommended stock levels that help companies improve inventory turns, free up working capital and increase cash flows, just to name a few of the benefits of optimized inventory.
According to IBM, companies everywhere are facing similar challenges around increasingly complex and demand-driven supply chains. Such challenges can affect the entire fulfillment process, from managing how and where to fulfill orders, how much inventory to store and in which location, and the planning and execution of shipments to meet customer commitments.
Richard Douglass, worldwide industry director of manufacturing for Smarter Commerce within the Software Group of IBM, described the IPFA inventory optimization solution as an end-to-end proposition with powerful new simulation capabilities.
The capabilities allow users to compare IPFA-generated optimized safety stock targets against a simulated view of inventory to avoid stockouts, according to Douglass. Sensitivity analysis has also been enhanced to bring more confidence to the recommended stock levels based on the ability to consider the uncertainty in the forecast or fill rate. Companies can define a range of variation for input parameters such as forecast error and fill rate instead of requiring an analyst to run several "what if" scenarios and making manual comparisons across the individual recommendations.