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INVENTORY OPTIMIZATION STRATEGY

Inventory optimization consulting that drives profits.

Excess inventory often hides/compensates for supply chain deficiencies. It’s important to leverage smart inventory placement, product flow and segmentation to develop robust omnichannel fulfillment strategies driven by customer demand.
A materials management consultant works on inventory cost reduction.
A union organizer learns about micro-fulfillment technologies and labor laws

Leverage enVista experts to optimize your inventory investment strategies.

enVista’s supply chain and inventory optimization experts use best inventory optimization practices to analyze complex data around your forecasting/inventory optimization needs, identify gaps in your current processes and suggest best practices to maximize the potential of one of your most important capital investments.

Segmentation

Each product is analyzed across many different attributes from sales and demand profiles to supply availability and cost. We utilize these attributes to segment your supply chain’s fulfillment and inventory logic into targeted strategies to drive efficiencies up and costs down.

Product Lifecycle Management

Our lean inventory consultants review product lifecycle stages and processes when considering inventory to gain a holistic view of your supply chain management system. This analysis generates strategic supply chain planning recommendations around demand and supply to manage and minimize cost/waste throughout all lifecycle stages within your network.

Forecast Accuracy

Our inventory optimization consultants analyze forecast performance and value add activity along with historical demand to inform inventory strategy and correlate supply impacts to reduce inventory investment while increasing customer service.

Big Data Analytics

enVista utilizes state of the art analytical tools for a thorough and detailed approach to data analysis. Hundreds of millions of records are cleansed, analyzed, and visualized precisely and efficiently to uncover normally unseen insights.

Breadth of Expertise

enVista’s inventory optimization team brings to the table a combined 50+ years of experience. With experience as both supply chain management consultants and practitioners, the team offers expertise in multiple industries ranging from manufacturers and distributors to retailers.  

Inventory Forecasting and Planning as a Service (IFPaaS)

Uniquely developed in response to today’s unrivaled demand variability, enVista’s subscription-based consulting service provides a convenient, consistent and scalable way to leverage enVista’s dedicated inventory optimization consultants and comprehensive inventory forecasting and planning solutions, including AI-powered dynamic inventory allocation capabilities.

Our team of global inventory experts complete a demand forecasting analysis, create an initial inventory model and then manage and monitor inventory performance on an ongoing basis as part of our IFPaaS offering. enVista’s inventory experts act as an extension of the client team to help deliver consistent inventory availability and profitability across all channels and locations in today’s dynamic market.

enVista’s comprehensive inventory optimization solutions enable you to remain ahead of supply and demand variability and optimize inventory by echelon and channel. Leverage the solution on its own or delivered alongside enVista’s highly extensible, cloud-native omnichannel order management software with enterprise inventory availability for powerful results.

Featured Insights

Inventory Optimization FAQs

Inventory optimization can help organizations figure out how much stock needs to be ordered at any given time. It allows an organization to track inventory from when it is purchased, to when and where it is sold. Good inventory optimization will respond to trends, allowing an organization to get ahead of any industry shortages and ensure there is enough stock to fulfill all customer orders.

Since excess inventory can tie up an organization’s available cash, it can cost an organization to keep too much inventory in stock. Therefore, a good inventory management solution also makes sure that an organization doesn’t have too much unused inventory. Since organizations never want too much deadstock (unsold stock), inventory turnover is used as measure to determine an organization’s inventory optimization success. enVista’s inventory optimization consultants can help ensure that your organization has enough stock to fulfill your order quantities, while also working on reducing unsold inventory to maximize company profits.

Demand forecasting  

Demand forecasting uses historical data to understand the likely future demand for a product. It helps companies make informed decisions about how much stock to store, and it gives an idea of future revenue over a given period.  

Inventory replenishment 

Inventory replenishment involves moving certain products out of inventory storage and onto picking shelves. This clears out space for more inventory to be received from a manufacturer. This process helps make sure there is plenty of inventory ready to be picked and packed to meet order demand. This helps prevent delayed deliveries and backorders, increasing customer satisfaction. 

Inventory Storage 

Any company that sells physical goods must invest in optimizing inventory storage. Optimized inventory storage helps companies save money, fosters customer satisfaction and creates space for business expansion. 

Inventory levels 

Keeping the right inventory levels can save a lot of unnecessary costs. Too little inventory can lead to dissatisfied customers, leading to loss of business and missed sales opportunities. Too much inventory can lead to high storage costs. Because of this, one of the biggest goals of an inventory optimization project is to figure out the ideal inventory levels for a company.  

Meeting consumer product demand, creating a positive customer experience, and effectively vying with the ultra-competitive order-to-delivery times that leading retailers have implemented all require inventory flow precision and positioning.

Inventory optimization, or product flow optimization, allows your company to reduce out-of-stock items, minimize carrying costs, increase fulfillment turn rates and ensure margins are preserved. By balancing capital investments, maintaining service level goals and considering supply and demand volatility, companies can dramatically improve inventory turns, improve service levels and significantly reduce costs. Proper inventory optimization will allow you to keep the correct amount of stock on hand and reduce the minimum amount of stock required to maintain optimal service levels for your customers.

enVista’s inventory optimization process involves accurately allocating your inventory across your supply chain channels, evaluating your supply and demand volatility to determine optimal safety stock levels to reduce the amount of inventory, reducing capital holding costs and maintaining or improving customer service levels.

Our expert consultants help you optimize your organization’s product flow, allowing your company to effectively improve your order-to-delivery times to be competitive in the global retail landscape.

 

enVista’s inventory optimization consulting allows your organization to:

  • Reduce overall inventory holding costs with inventory reduction
  • Improve service levels to the end customer
  • Improve inventory turns with inventory optimization systems
  • Reduce capital risks with improved inventory accuracy
  • Reduce distribution center storage requirements

With an optimized inventory plan, you will see optimized inventory levels to match the needs of your business. This allows you to leverage inventory performance increases and changing product flows, which can reduce stock levels to address issues of overcrowded warehouses, poor cash flow, and obsolete inventory. You will be able to utilize our in-house modeling tools that determine optimal inventory positioning down to the SKU-level based on push-and-pull boundaries, supply and demand variability, velocity class (ABC) and other factors.

Inventory optimization consulting will help you determine optimal product position in the network in order to maintain service level but reduce overall holding cost of inventory. This allows you to understand the cost of inventory held relative to the sales of the product.

Creating an inventory plan for your company is crucial to saving money, improving customer service levels and driving growth. Here are a few common inventory optimization techniques. 

  • Use demand forecasting 

Accurate demand forecasting requires a company to have access to historical order data. This data shows the bigger picture of past sales trends and helps a company anticipate high and low order times. Demand and inventory forecasting also allow companies to decide when they need to hire seasonal staff, increase warehouse storage space, run a sale, etc. For a small company, demand forecasting may be simple, but as companies grow, it can become more and more difficult to keep track of data, so most large companies employ demand forecasting tools. 

Choose the right reorder points 

Successful companies need to know when to order new stock. Order it too early, and you will encounter storage issues. Order it too late, and you will run into inventory issues. A company’s reorder point should make sure that too much cash is not tied up in inventory at any given time. Lead times (the time it takes inventory get to your warehouse, from your manufacturer etc.) should also be considered.  

  • Keep the right amount of safety stock 

Safety stock (also referred to as “buffer inventory”) is the excess stock a company keeps on hand to mitigate unexpected hiccups. For example, safety stock can keep a company on track even if there is an issue with a supplier or a sudden demand surge for a product. Things like maximum daily usage, average daily usage, and maximum lead time can be used to calculate the amount of safety stock a company needs. 

  • Conduct an inventory audit 

Accurate and regular inventory audits go a long way in helping companies keep track of inventory. A company’s holding costs (storage, warehouse staff wages, depreciation costs etc.) should be watched to avoid any problematic discrepancies and to make sure the company is holding the right amount of inventory.  

  • Distribute inventory across your warehouses 

Having all your inventory in one place can make things easier to manage, but it is not always the most effective method of inventory storage. You want to have your inventory close to where the demand is. For this reason, it is best for large companies to distribute inventory across multiple fulfillment centers, so that orders can be delivered quickly, and shipping costs can be minimized. 

  • Keep track of SKUs 

Most major companies sync their SKU’s to some type of inventory optimization software. This helps them update, track, and manage products, even across wide distribution networks. Keeping track of your inventory in real time helps your company avoid running out of inventory or overselling. 

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