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Monthly Archives

August 2012

Inventory Optimization: Is Your Acquisition Cost Off-Balance?

Inventory Optimization – Do you know your Acquisition Cost

In today’s tight economy, retailers like you are constantly looking for the best and most profitable ways to grow their business. Last week, we talked about inventory optimization and how a truly optimized inventory results in lower inventory and higher profits by managing a balancing act of acquisition cost, carrying cost, vendor minimums, price breaks, gross margin, sales dollars and service goals. This week we take a closer look at acquisition cost and the role it plays in the balancing act of inventory optimization.

Acquisition Cost and Demand Forecasting

I spend a lot of time with retailers, and every executive I meet is interested in accelerating their sales growth while improving their distribution capability at the same time. One often overlooked piece of the puzzle is managing the Acquisition Cost.
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Has Inventory Optimization Left you Out-of-Stock and Over-Stocked?

Inventory Optimization doesn’t mean Out-of-Stock or Over-Stock

Just last week, I was talking with a retailer who wanted to know how his optimized inventory resulted in overstock and out-of-stock at the same time. I hear this question all the time and the answer is simple. They don’t have a true demand driven optimized inventory because either they don’t have an inventory optimization solution or their solution isn’t really optimizing their inventory.

Inventory Optimization needs accurate Demand Forecasting

Many times if we optimize one thing it is to the detriment of something else. However, for successful inventory optimization you need a demand forecasting and inventory replenishment solution that can optimize your inventory across the supply chain. This means lead time forecasting; DC to DC transfers, DC days processing, internal transfers, the entire pipeline from Purchase Order to consumer purchase must be considered in the review process. Inventory Optimization should increase your profits by calculating the most economical way for you to flow inventory (EOQ) and minimize costs.
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