Safety Stock Optimization
Challenges
Manufacturing industries face the challenge of efficiently planning and managing their raw material and intermediate inventory. Traditional Material Requirements Planning (MRP) systems only generate procurement orders based on lead time and demand plans, without considering the potential impact of variabilities. This approach also fails to optimize the stage at which companies should build up stock (e.g., raw materials, subassembly items, semi-finished goods, or finished products), which can significantly impact inventory holding costs.
Sophus Solution
Optimize the inventory level for raw materials and intermediates by considering the total inventory holding cost and ensuring that the order fill rate can be fulfilled effectively. This approach balances the need to reduce inventory holding costs with the need to maintain an adequate supply of materials to meet customer demand.
Benefits
Order Fill Level Improvement
Inventory Reduction for as much as
20-25%
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