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Blog: Inventory Segmentation: Revolutionizing Inventory Management

Making Better Decisions Through Inventory Segmentation

By Drazen Blagovic

In the ever-evolving landscape of supply chain management, the importance of efficient inventory segmentation cannot be overstated. Our recent GAINS Summit shed light on this critical topic, offering groundbreaking strategies to help customers enhance decision-making through effective inventory segmentation.

The GAINS Summit illuminated the path toward more informed, efficient, and strategic inventory management. By leveraging the power of inventory segmentation and the advanced tools within GAINS, businesses are well-equipped to make better decisions, optimize operations, and stay ahead in the competitive world of supply chain management.

The Core of Innovation: AI and Analytics

The heart of this transformation lies in the innovative use of artificial intelligence (AI) and real-time analytics. By segmenting inventory based on various critical factors such as demand patterns, profitability, and customer service levels, GAINS offers a nuanced approach that traditional methods lack. This is not just about sorting products into categories; it’s about understanding the unique dynamics of each segment and tailoring strategies accordingly. In a nutshell, we apply better math to address the complexity of your inventory challenges.

What sets GAINS apart is its ability to provide actionable insights that drive better decision-making. Using Decision Engineering, our tools simulate the impacts of inventory classification changes; businesses can predict and plan for various scenarios, reducing risks and enhancing efficiency. This proactive stance is crucial in a world where supply chain snags can have domino effects on global markets.

In this V.U.C.A. era, (Volatility, Uncertainty, Complexity and Ambiguity) supply chain agility is paramount. GAINS is leading the way with its groundbreaking approach to inventory segmentation. At the 2023 GAINS Summit, we unveiled our latest advancements, demonstrating how technology is reshaping inventory management.

A Smart Approach to Inventory Segmentation

GAINS sets itself apart by utilizing artificial intelligence (AI) and real-time analytics, allowing businesses to segment inventory based on diverse factors such as demand patterns, profitability, and customer service levels. This approach provides tailored strategies for each inventory segment.

Understanding ABC Classification

GAINS takes a diverse approach to inventory classification, emphasizing the adaptability of the ABC system within GAINS. The platform provides significant enhancements in user autonomy and decision-making capabilities. This tool empowers managers to have a clear, repeatable process for inventory classification, ensuring transparency and efficiency. The offering’s capabilities show how it supports various business decisions, from optimizing cash flow to maximizing profitability.

Strategic Inventory Segmentation

The essence of inventory segmentation lies in defining and managing inventory classes as well as segmenting inventory based on parameters like profitability, customer service levels, and location-specific demands, enabling a more targeted and effective inventory strategy.

Empowering Decision-Making with Simulation Tools

A standout feature is the simulation capability within GAINS. Before implementing any classification changes, users can simulate impacts, providing a data-driven foundation for decision-making. This tool is instrumental in understanding the potential effects on inventory levels, customer service, and overall supply chain dynamics.

Practical Application and Customization

The session walked through the process of creating population groups and policies within GAINS. It highlighted the flexibility in setting up various classifications and the ability to tailor these to specific business needs.

Future-Proofing with CSLO

The integration of Customer Service Level Optimization (CSLO) enhancements in GAINS’ platform is a testament to our commitment to future-proofing supply chain operations. GAINS is not just responding to current market needs but anticipating future challenges. We are set to integrate CSLO enhancements, linking inventory classification directly with service-level policies. This forward-thinking approach aligns inventory management with strategic business objectives, ensuring resilience and adaptability in a dynamic market.

Beyond Traditional Classes: Advanced Applications of GAINS Technology

The application of this technology extends beyond traditional service-level driven classes. By calculating different demand segments, GAINS provides deeper insights across the company. The simulation feature, a standout innovation, allows businesses to run sensitivity analyses on forecast inventory investment, aligning segmentation with financial reporting and measuring its impact on working capital.

Users can easily identify critical groups/segments/subsets within complex product portfolios, set up differentiated policies for each product segment, and guide warehouse policies, new product development, pricing strategies, and portfolio optimization processes. GAINS is not just providing a solution; it’s charting a new course for the entire supply chain industry, demonstrating that with the right tools and insights, businesses can make the decisions needed to thrive in today’s challenging economic landscape.

GAINS’ advanced inventory segmentation tools and strategies help to address:

Optimizing Cash Flow: Tailoring inventory levels to match demand patterns, thereby reducing unnecessary capital tied up in excess stock.
Facilitating Operational Changes: Providing concrete support and a clear roadmap for operational changes to implement strategic decisions effectively.
Maximizing Profitability: Identifying and focusing on high-profit inventory segments to drive revenue growth.
Enhancing Customer Service Levels: Adjusting inventory strategies based on customer needs and service level agreements to improve customer satisfaction.
Risk Reduction in Supply Chain: Predicting and planning for various supply chain scenarios to mitigate potential disruptions.
Adapting to Market Demands: Aligning inventory strategies with changing market conditions and consumer demands.
Efficient Inventory Classification: Implementing a clear, repeatable process for inventory categorization, enhancing management efficiency.
Tailoring Strategies to Business Needs: Customizing inventory policies and classifications to suit specific business requirements and goals.
Forecasting and Planning: Utilizing simulation tools for forecasting and planning, understanding the potential effects on inventory levels and overall supply chain dynamics.
Strategic Business Decisions: Linking inventory management with overall strategic business objectives for cohesive operational planning.
Future-Proofing Operations: Preparing for future market shifts and challenges by integrating advanced tools like CSLO enhancements into inventory management practices.Top of Form

Embracing the Future

It’s clear that the future of inventory management is here. GAINS’ innovative integration of AI, real-time analytics, and robust simulation tools marks a new era in supply chain strategy. By embracing these advanced technologies, businesses are not only equipped to face current challenges but are also prepared for future complexities. GAINS stands at the forefront, offering guidance and expertise in a world where agility and precision in supply chain management are more critical than ever.

Ready to see what GAINS can do for your supply chain? Request a demo now to get started!

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