I was thrilled to see this article in Logistics Management about Dell’s inventory optimization pilot which saved them 55% in its initial application. In a mere 90 days, a pilot, rolled out to two suppliers, that was primarily focused on managing suppliers and replenishment processes via a consistent inventory policy reduced inventory, and associated costs, by 55% (from $6M to $2.7M). Imagine the savings Dell is going to realize when it rolls the new system out to the majority of its supplier base (that constitutes the top 80% of its spend), cleans, and analyzes its historical data. It’s savings will easily be in the hundreds of millions.
Compare this to Intel’s recent success through an optimized make-to-order cycle which significantly reduced inventory builds and associated costs. Do you see a pattern? I hope so!
The simple truth of the matter is that a good inventory optimization system that either contains demand planning and production planning optimization, or that integrates with demand planning and production planning systems, will save you a small fortune. So if you regularly carry tens of millions of dollars of inventory and don’t have an inventory optimization system, get one … NOW!.