Inventory Optimizer

7/28/2019 Inventory Optimizer

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Improve Supply Chain Efficiencies

using SAP Software

M. Raghunath, Vice President

Patni Computer Systems


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Strictly Confidential April 2007

Typical Supply Chain Issues for Large Organizations

1. The Forecasting Accuracy Problem - typically

60% or less in CPG, food & pharma even less

2. Inventory Disposition Problem - Dead inventory

accounts for 5% of overall inventory, increasing

overall supply chain costs & operations

3. Inventory Visibility & Optimization Difficulty in

tracking inventory at global level and having drill

down capability for decision making


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1. The Forecasting Problem

0%

25%

50%

75%

100%

Mar

AprM

ay Jun Ju

lAu

gSe

pOct

Nov

Dec

Jan

Feb

Mar

Apr

Get the Top Customers Right

Problems in Forecast Accuracy at the top

accounts creates instability in the valuechains inventories and customer service.

Gain unprecedented access to TopRetailers information

Improve the business processes drivingpromotional and baseline forecast creation

Shared KPI metrics among departments todrive continuous improvement

Gain efficiencies in the forecastingprocess by leveraging SAP/APOtechnology

The Need

Improving process, technology, communication and Metrics

Forecast Accuracy is usually below 70% at department store level

Forecast error leads to either stock out/missed sales or high inventory level at DC

Large Customers account for a disproportionate

share of the supply chain

Tools available to provide visibility of POS &

Inventory data on daily basis

Move from gut feel to knowledge based decisions

Manage politics & conflicting pulls from different

stakeholders

Current Relevance


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Solution: Collaborative Process with APO DP

Provide Forecasts

to National

Demand Planning

Analyze Past

Performance

Create Baseline

Statistical

POS Forecast

Incorporate

Promotional

Impacts

Collaborate

with

Customer

Create the

Order Forecast

Add Business and

Customer Intelligence

to Order Forecast

Reach

Consensus on

Demand Plan

Understand

Customer

Inventory Strategy


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POS based Forecasting Model Useful for Global CPG orgzns who would like to use POS (Point of Sales)

based forecasting to ensure optimum inventory levels at their DC, customerDC and stores by calculating optimum order quantity.

Calculation of optimum order quantity is based on applying various planning

parameters such as customers inventory policies, different time lags, target

coverage days etc

Business Problem

Patni Solution

Calculate optimum order qty, statistical POS forecast, internal matrices, etc

Leverage statistical forecasting in DP and apply that to POS data - Algorithmsbased on DP macros (thus avoiding SNP) and on actual customer data

(received through POS)

Improved accuracy in SKU replenishment

Improved efficiencies across supply chain & reduction in inventory costs

Enhanced customer service and communication between the client and itscustomers

Business Value

Solution can benefit any CPG/Hi-Tech client who wants to leverage SAP SCM investment for customer

based forecasting Visit Booth # 1347 & see demo of solution


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Typical Supply Chain Issues for Large Organizations

1. The Forecasting Accuracy Problem - typically

60% or less in CPG, food & pharma even less

2. Inventory Disposition Problem - Dead inventory

accounts for 5% of overall inventory, increasing

overall supply chain costs & operations

3. Inventory Visibility & Optimization Difficulty in

tracking inventory at global level and having drill

down capability for decision making


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2.Patnis Inventory Optimizer

Identification of slow-moving inventory

Standard SAP solution identifies slow-movers based on material movements for past x days

Patnis Inventory Optimizer takes into account the Forecast Information from Planning Systems to

identify slow movers

Action on slow-moving inventory

Standard SAP Solution does not provide mechanism for taking action on Slow Movers or Monitor the

progress of the same

Patnis Inventory Optimizer provides facility to take action on identified slow movers and monitor

the progress of action taken

Action taken is integrated with backend system


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Features

Identify non-performing SKUs based on Profitability

thresholds

Implement an action plan with speed and flexibility to

dispose off non-performing SKU i.e. repackaging,

trashing etc.

Choose, define and modify an action plan for

inventory disposal

Monitor progress in the implementation of action plan

for inventory disposal

Reports, alerts, and notification for visibility,

escalations and exceptions in the implementation of

action plan

Monitor Progress of Elimination Process

Overview Reports for Senior Management

Escalations and Alert Enablement

Inventory Optimizer Features

Inventory

Monitoring

And

Disposition Planning

Measure

Optimize Analyze


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Typical Inventory Optimizer Architecture in SAP

Environment


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User logs onto Portal

Based on his role /

profile, he views list

of slow moving SKUs

For all SKUs in the

region, calculate

diff. of Inventory

levels and forecast.

Compare to

parameter value and

tag as slow/non/fast

mover Create a screen to

show this list

Process Flow

Step 2 Step 3

Action Plan Owner Approver

Step 4

SKU Inventory

ERP e.g SAP R/3

Demand Plan

System

e.g. i2, Manugistics

Role

Process

Step

What happens?

How?

Business Logic

to be developed

in xApp

Backend System

Functional Area

Enterprise

Services ReadInventory data

at SKU level

Read DP data at SKU level

Step 1

User chooses to

either create new

action plan or

view status of

existing action

plan and if

necessary, modify

the same.

This includes

dashboard reports

for monitoring

the status ofaction plans

After creation /

modification of action

plans, he can submit

the action plan which

will be sent for

approval based on the

workflow maintained.

Workflow process is

triggered when the

owner submits the

action plan and

notification mechanismtakes over to notify the

approver of a pending

work item for approval

Approver approves /

disapproves the action

Plan. If approved, the

information is stored

persistently in the CAF

DB, else a notification

is sent to the owner

regarding the

disapproval

Workflow process is

triggered when the

approver approves/rejects the action plan

and notification

mechanism takes over

to notify the owner of

the status of the work

plan


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Inventory Optimizer Plan Status Report

Summary

Report on Plan

Status


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Thank You

Documents

Inventory Optimizer