Inventory Analysis: Affordable, Available, Actionable

  • Richard Thelwell
  • May 14, 2014

For any manufacturer or distributor, the problem with inventory management is easily stated. Simply put, there’s often too much of the stuff that isn’t selling—and far too little of the stuff that is selling.

The result? Disappointed customers, stockouts and lost sales—combined with shelves groaning with inventory that nobody wants.

Put like that, the mismatch sounds almost comic. But to companies wrestling with just this problem, it’s a quandary that’s very real, and far from laughable.

For in today’s business climate, lost sales and disappointed would-be customers can be very bad news indeed. What’s more, the financial drain of financing unwanted inventory can be crippling. Because while banks are admittedly more willing to lend than they were at the height of the financial crisis, borrowing limits are tight, and terms are expensive.

So what’s to be done?

Inventory analysis: cheaper than ERP, easier than best-of-breed.

Fancy inventory optimisation algorithms can help, of course. So can advanced forecasting techniques.
The latter help you to more accurately predict the customer demand that you’ll face; the former help you to better meet those customer demands with available stock.

If you’re lucky, your ERP provider will have offerings that suit. If you’re unlucky, you’ll be knocking on the doors of best-of-breed niche providers.

But for many companies, neither option is particularly palatable. High-end inventory management and forecasting solutions are generally only available in high-end ERP systems—for which read ‘expensive’.

And niche best-of-breed providers? Cheaper, but there are often integration headaches to address.

There’s a skills gap to worry about, too: fancy futuristic techniques that must somehow be mastered by today’s back office employees.

In short, there’s a real danger of laying out serious money for a solution that is simply too complicated for the average mid-sized business to fully benefit from.

Inventory analysis: under control, faster and cheaper.

Which is why, of course, so many manufacturers and distributors—especially those with elderly or partially-implemented ERP systems—try the ‘sticking plaster’ approach of spreadsheet-based analysis.

It works, after a fashion. But data extraction is a chore, multiple spreadsheets are often required, and the spreadsheets involved are rarely available in anything like ‘real time’. And charts and dashboards? Let’s not go there.
So is there a better way? The answer: yes.

Because effective inventory analysis, carried out regularly and in a timely manner, can be an effective low-cost alternative to high-end sophisticated forecasting and inventory analysis approaches. What’s more, it can provide insights that can make existing inventory management systems deliver better results, by providing accurate ‘real life’ data to plug into safety stock and lead time formulae.

Better still, inventory analysis is a solution that delivers quicker results. Because cloud-based inventory analysis—delivered through a Cloud BI solution—can be implemented in a matter of weeks, requires no additional skills to master, and can deliver inventory analysis insights via reports, dashboards, or chart-based analytics tools.

Inventory analysis: self-financing actionable insights.

At Matillion, we know that most of our customers come to us wanting a low-cost, effective Cloud BI solution that can be implemented quickly. And usually, financial reporting and analysis is fairly high on their agendas.

But on its own, better financial reporting has a limited ROI. A business might need it—and need it very badly—but unless it helps to unlock operational improvements through improved cash flow and lower debtor-days, then the boost to the bottom line is limited.

Not so with inventory analysis. Better stock availability leads to higher sales. And lower levels of slow-moving or unwanted inventory free up cash—cash which can be returned to the business, or used to finance inventory that is in demand.

So if you’ve too much stuff that isn’t selling—and too little of what is selling—we’d urge you to look at cloud-based inventory analysis.
Higher sales, happier customers, faster inventory turns—and less inventory. What’s not to like about that?

If you would like to find out more about Inventory Analysis, consider downloading this useful Ebook below.