September 26, 2023

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Designing Homes With Heart

Inventory Management and Investment Portfolios

Be it stocks, bonds, real estate, or business opportunities, anyone who invests in these entities understands the goal of the investment; to gain the highest return possible with the lowest amount of risk.

The method utilized by investment managers is to collect and analyze vast amounts of information. Everyday, these managers review, analyze, and eventually decide whether or not to invest in an investment opportunity. This occurs thousands upon thousands of times each day with billions of dollars being exchanged.

In America alone, there is roughly $600 billion that is tied up in working capital and a large portion of that amount is inventory. Unfortunately, much of this inventory was purchased utilizing outdated concepts of planning inventory. For example, a typical inventory planner will only consider three or four variables when deciding on whether to invest in inventory such as weeks worth of supply, ABCD stratification, usage rates, etc. However, there are at least a dozen or more dynamic variables that impact inventory on a monthly basis. These variables include, minimum or maximum order quantities, freight policies, cost, lead time, previous demand, present demand, future demand, service level targets, reduction goals, cycle demand, etc. The list is ongoing and varies from one organization to the next.

The point is, what if you learned that your 401k fund manager only reviewed two or three variables for managing your investment? Would you feel confident in their ability to manage your money? Then why is it that many organizations accept the current methods employed to manage such an enormous asset like inventory?

To more strategically plan your inventory it is important to consider why inventory exists in the first place. Distributors and manufactures are meeting customer demand (need) with supply (product). In so doing the vendor expects to earn a return (profit) commensurate with the amount of risk. Does this sound familiar with the expectation of an investment fund manager?

Through the use of advanced inventory optimization, there is a better way to plan inventory that takes into account all dynamic variables that impact your inventory levels. This approach not only reduces the risk of your investment, but also improves your return through achieving higher service levels with a lower amount of inventory. Most of these projects are undertaken with a high probability of achieving an ROI within six to twelve months. Contact TCLogic for more information. You can learn more about TCLogic by visiting http://www.tclogic.com