How to solve for the high cost of inventory challenges and disruptions

The ripple effects of the pandemic continue to generate massive disruptions for global supply chains. According to ISM, 77% of companies are reporting increased lead times (link resides outside ibm.com) for inputs from China, 83% are reporting delays from Europe, and 57% or more are reporting disruptions from North American suppliers. In response, most companies (81%) are adjusting their inventories – with half holding more inventory than usual to weather disruptions.

How companies react can have a significant impact on their bottom line. Public companies that mismanage inventory substantially under perform compared to peer companies in financial and stock performance.

Even in “normal” times, inventory management and reaction to disruptions can have significant impacts:

• Out-of-stock situations cost retailers more than USD 1 trillion annually (link resides outside ibm.com)
• As much as 12% of potential revenue (link resides outside ibm.com) can be lost as a result of markdowns
• As much as 20-30% of a manufacturer’s inventory (link resides outside ibm.com) is dead or obsolete
• Inventory holding costs represent more than 25% of total unit costs (link resides outside ibm.com)

So how do you address disruption without holding onto excess inventory? Increasingly, organizations are turning to purpose-built control towers to optimize inventory visibility and management.

IBM Sterling Inventory Control Tower helps companies manage inventory in disruptive environments in several ways:

• Establishing end-to-end inventory visibility by correlating data across siloed systems and combining it with external event information to provide actionable insights into potential imbalances and disruptions. The solution includes a personalized dashboard that provides visibility into critical inventory KPIs with detailed information such as average days of supply, expiring inventory, potential out-of-stock situations, etc. The solution provides visibility, trend and analysis of the differences between planned and actual inventory.
  

• Better predicting disruptions and improving resiliency with AI that provides smart alerts and actionable insights to help users understand the upstream and downstream impact of events on customers – and then prioritize mitigating actions. IBM Sterling Inventory Control Tower is unique in that it integrates both demand and planning intelligence, including external event detection, to help predict demand changes and disruptions – and the impact on revenue and customers.
• Better controlling, collaborating on, and managing disruptions and exceptions across the entire supply chain with AI-powered Resolution Rooms and Digital Playbooks that help users quickly respond to unplanned events, hone execution to drive KPI performance, and reduce costs like expedited shipping and safety stock. Resolution Rooms allow users to easily collaborate with the right team members across the organization and with partners. Users are provided with immediate access to information through Resolution Rooms, which leverage natural language search and conversations resulting in easy interaction. The Digital Playbooks provide users guidance in scenario responses and issue management based on best practices – and preserve organizational knowledge to speed issue resolution over time.

Sterling Inventory Control Tower leverages open APIs and dozens of out-of-the-box connectors for easy integration with data sources so it can be up and running in just weeks to speed time-to-value.