Few organisations find the perfect balance between service levels and working capital investment. Our experience from over a decade of assessments is that excess inventory is approximately 60% of inventory held, while availability is at least 10% lower than desired. This means that the inventory mix is out, resulting in waste and potentially unhappy customers.
DSV offers key customers an Inventory Assessment to benchmark inventory and order management KPIs, with four focus areas:
1. Demand Planning Analysis
Our forecasting specialists review a customer's demand forecasting process and forecast accuracy. They do hold-outs and simulations to test different algorithms to see what the best potential accuracy is. DSV has been able to improve our customers' forecast accuracy (WAPE) by at least 5%.
2. Inventory Modeling Analysis
Our IO practitioners work with our customers to classify, group and prioritise products based on demand and/or unique stocking characteristics. Inventory parameters and constraints are then defined for these groups of products before the model is used to determine the optimal policies.
3. Supply Planning Analysis
Our experience is that supplier lead time and performance measurement is often overlooked or taken for granted in the planning process. As it is a vital input in the safety stock calculation, we carefully measure performance to ensure that all the planning inputs are as accurate as possible.
4. Data Visualization and Exception Management
Too much time is spent on working through data and extracting reports. DSV presents KPIs and exceptions in a way that is meaningful and easy to use. The focus is on the 5% that is wrong, and not the 95% that is right.
DSV provides a data specification for customers to extract from their ERP systems, which is then used in the inventory assessment. A workshop is also facilitated to determine the qualitative information required for the inventory model. Once the model has run, the results - and our recommendations - are presented to the customer.