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Suply Chain Series Cloudfactory"Supply chain inventory Optimisation is defined as a method of balancing ones capital investment constraints and goals along with the defined service-level goals over a large assortment of stock-keeping units (SKUs) while considering all demand and supply volatility situations. It includes the practice of having the right levels of inventory to meet your target service levels while keeping a minimum amount of capital locked for inventory."

Inventory optimisation is also considered as the next level of inventory management for warehouse and supply chain managers. Which is why, manufacturers can achieve holistic Inventory Optimisation, by considering both supply and demand fluctuations and minimizing excessive inventory. 

Supply chain inventory Optimisation can easily help manufacturers overcome warehouse management and stocking problems with reduced inventory. Studies show that almost 65% of damaged inventory ends up that way due to the incorrect method of packing, storing, or securing in freight containers. Inventory optimization can help overcome these errors to a large extent. With accurate Inventory Optimisation, distribution and manufacturing can streamline working capital requirements and stocking issues using predictive analytics and data-driven insights.

inventory optimisation

Simple definition of aims for Inventory Optimisation in the SME.

  • The process of using inventory in the most efficient way.
  • Maintaining the right amount of inventory to meet demand​
  • Keep logistics costs low and optimised​
  • Avoid inventory issues such as stockouts, overstocking, back orders etc.
Supply Chain Inventory Optimisation

Transform Your Inventory? Consider:


Garbage in garbage out

  • Need to be data-driven – Need to make strategic decisions based on accurate data!
  • Access to accurate data will allow you to foresee any problematic areas.

Fast moving stock

  • What stock is crucial to the bottom line
  • Inventory turns – sitting on shelves?
  • Seasonality?

Improve forecast accuracy

  • An accurate forecast will help predict future sales with optimal inventory orders, track sales.
  • Identify changes in demand and ensure you are not over-stocked or incur stock-outs.


  • We need understand if we can plan and rely on supply
  • Multi sourcing
  • DIFOT analysis
    • A reminder, our customers are also measuring our performance!

Inventory storage

  • Ensuring you have the correct storage capabilities to meet demand – and indeed growth.
  • Consider getting your stock as close as possible to your customers – multi location
  • Consider working with 3PL warehouse providers to balance.
  • Consider if orders are more drop ship or consignment

Organise your warehouse

  • Consider Operational efficiencies
  • Walking is the highest cost in a warehouse so its crucial to plan layouts and process
  • Consider location of bins and zones for optimal pick path
  • Consider Pick faces and replenishment process to move from Bulk
  • Place your fast moving stock at the front of the warehouse for easy and quick access.