How Data-Driven Agility Helps You Optimize Inventory Levels And Reduce Costs

Brandon Marcus
January 26, 2024

Ensuring you have enough safety stock to meet customer needs while minimizing inventory costs can be a high-stakes balancing act. Poor safety stock calculations and inaccurate lead times can lead to stockouts that dent your profit margins and customer reputation – and too much safety stock also hurts your bottom line. 

So, how do you eliminate the guesswork and inefficiency in calibrating your inventory needs? This post explores how a holistic, data-driven approach helps you effectively manage in-transit inventory, optimize safety stock and reduce costs.

Challenges in Conventional Inventory Management

Traditional inventory management systems are often inflexible and ill-equipped to integrate timely data and help you make informed tradeoffs to balance inventory levels. Common challenges include:

  • Inaccurate Lead Times: Lead times in systems like ERPs often lack historical transportation data and are only updated by lane and not detailed by carrier, route or service. This leads to sub-optimal carrier choices and safety stock miscalculations, causing excess inventory or stockouts. 
  • Incomplete Order Data: Without access to granular order fulfillment lifecycle data, it’s difficult to identify and assess the root cause of delays and act to eliminate bottlenecks like late pickups, late unloading and port dwell times.
  • Inaccurate Commit Dates: Without accurate order fulfillment cycle times at the SKU level, it’s difficult to set precise delivery commitment dates. 

A Holistic, Data-Driven Approach to Managing Inventory

Building a responsive supply chain that can adapt to disruptions and changing market conditions requires decisions informed by accurate, up-to-date information from many sources. For instance, factors like demand variability, lead-time reliability and product value all influence safety stock needs and calculations. Without unified data, it’s almost impossible to dynamically adjust and balance stock levels as conditions change. 

Unity SCM works with its customers to aggregate all important data sources and create a comprehensive supply chain picture. In this integrated data environment, your teams can:

  • Improve Inventory Planning: Update lead times based on service, lane, route, carrier and product-level data (instead of outdated averages), which improves safety and cycle stock planning and reduces excess days in inventory and the associated costs.    
  • Improve Carrier-Capacity Allocation: Evaluate carrier performance and route efficiency to improve carrier capacity allocation and make informed carrier choices. Identify underperforming carriers and address issues like late pickups or extended dwell times.
  • Precise Delivery Commitments: With accurate order fulfillment cycle times, you can ensure delivery commitments are precise, minimizing the probability of downstream delays that impact inventory costs, transportation costs and customer service levels.
  • Remove Order Bottlenecks: With granular order milestone information, from PO creation to delivery (acknowledgments, CRD, booking, shipment and delivery details), identify and remove order workflow bottlenecks faster. 

When data is integrated and normalized, it creates a shared understanding across inventory management teams, enabling cross-functional collaboration and proactive responses to disruption and exceptions. 

Unity SCM’s Flexible Data Infrastructure: Uncover Insights From Noise

With data versatility – the ability to easily integrate and combine new data, and remix and repurpose old data – recognize patterns and uncover new insights faster, allowing you to adapt to changing conditions and business needs. This data-driven agility powers better inventory planning and decision-making, and reduces the costs of storing, financing and insuring inventory. 

In a world of constant change, Unity SCM’s flexible data infrastructure equips businesses to navigate supply chain chaos and build a more agile, responsive and cost-effective inventory operation.

Contact Unity SCM to explore how to help you manage inventory more effectively, or book at meeting with us at Manifest 2024 in Las Vegas -- Booth #1314.