Ronan O'Donovan, product marketing manager with ILOG Supply Chain Applications, talked about multi-echelon inventory optimization. Ronan discussed several case studies of the application of MEIO, including for planning inventory build-up for seasonal peaks in demand (a project that saw the company actually reduce inventory in the system thanks to increases at the plant level and reductions at the DC level).
Another example: a pharma company using MEIO to understand the potential for reducing its inventory at which stage of its production process. Importantly, this project helped the company's management understand the impact of successively higher fill rates on average working capital. This example is significant these days as companies experience tighter credit conditions and the need to optimize their current capital.
Bottom line lessons learned (to paraphrase Ronan): As supply chain professionals, we all know that we could reduce inventory if we could reduce forecast error or improve performance, and increasing service levels will increase inventory. But by leveraging tools for MEIO, you can quantify the impact of different scenarios and help management make the necessary tradeoff decisions around service levels, inventory and so forth.
Ronan also did a couple of quick demo presentations using ILOG's own Inventory Analyst and Supply Chain Analyst applications. The demos underscored the ability to create reports with the necessary graphics and illustrations that demonstrate the impact of various scenarios – again, a necessity when you're trying to make a business case for change based on the results coming out of the tool.