what drives inventory effectiveness in a market-driven world? summary charts

Inventory Optimization Study

Summary ChartsFebruary – October, 2015

Agenda

Study Overview Inventory Optimization Software

Inventory Management

Team Alignment

Business Pain

Study Overview

Most Respondents Are Manufacturers and Two-Thirds Work in a Process Industry

The Most Common Industries Are CPG, Food & Beverageand Chemical

Company Revenue Is $5B on Average

Most Respondents Work in a Supply Chain Role, Work at aDirector/Manager Level, and Are Based in US & Canada

Agenda

Study Overview

Inventory Optimization Software Inventory Management

Team Alignment

Business Pain

Respondents Were Categorized in Two Groups Based onMost Important Inventory Optimization Software

Respondents Are Evenly Split Between Advanced vs. Basic for Most Important Software

SAP Is Most Common Provider Overall andEspecially for Advanced Software

SAP Is Most Common Provider for Both Advancedand Basic Software Users

Those with Advanced Software Are More Likely to Be in the Retail Industry and Located in North America

Than Those with Basic Software

Those with Advanced Software Are More Likely to Be Satisfied with the Software and Have Received ROI

Nearly Half Are Satisfied with TheirMost Important Inventory Software

Those with Advanced Software Are More Satisfied withTheir Inventory Software Than Those with Basic Software

Sample Responses for Why Satisfied with Inventory Optimization Software

Sample Responses for Why NOT Satisfied withInventory Optimization Software

Nearly Half Have Achieved ROI and Over One-Quarter Can Match “Top-Down” and “Bottom-Up”

Those with Advanced Software Are More Likely Have Achieved a ROI on Their Software Than Those with Basic Software

Those with Basic Software Are More Likely to Need the Ability to Match “Top-Down” and “Bottom-Up”

Than Those with Advanced Software

Most Common Way for Those with Advanced Softwareto Improve Inventory Is Inventory Optimization Software

For Those with Advanced Software, the Supply Chain Group Is Most Likely Sponsor

For Those with Advanced Software, the Supply Chain GroupIs Most Likely to Have Inventory within KPIs

Agenda

Study Overview

Inventory Optimization Software

Inventory Management Team Alignment

Business Pain

Nearly Half Consider Company to Be Effective atMaking Inventory Decisions

Those with Advanced Software Are More Likely to Report Company Is Effective at Making Inventory Decisions

Sample Responses for Why Effective at Making Inventory Decisions

Sample Responses for Why NOT Effective atMaking Inventory Decisions

Over Half Reduced Inventory in 2014;Primary Reason Is Greater Attention to Detail on

Inventory Performance

Respondents Are Equally Likely to Have Reduced InventoryAcross Software Types

Regardless of Software Type, Greater Attention toInventory Performance Is Primary Reason for

Inventory Reduction

Cycle Counting Is Most Common Way to ControlInventory Accuracy

_________________________________________________________________________________Source: Supply Chain Insights LLC, Inventory Optimization Study (February - October. 2015)Base: Manufacturers, retailers, and distributors who use inventory optimization software and have $250M+ in revenue – Advanced Software (n=32), Basic Software (n=32)Q24. How does your company control inventory accuracy? *Basic = ERP (Enterprise Resource Planning) or ERP + APS (Advanced Planning Software); Advanced=Software in addition to ERP and/or APS Higher than other group at 90% or higher level of confidence

We apply cycle counting

FULL STOCK COUNT (NET)

We apply a full stock count - quarterly

We apply a full stock count - yearly

We apply a full stock count - other regular timing

0.21875

0.03125

0.09375

0.5625

0.3125

0.03125

0.15625

How Company Controls Inventory Accuracy:By Software Type*

Basic Software Advanced Software

Do not show

Important Inventory Goals Needing Attention:S&OP Maturity and Adherence to Inventory Targets

Maturity of S&OP Is Most Important Inventory Goal, but Clarity of Inventory Targets Is Top Performing

Maturity of S&OP Is Most Important Inventory Goal, but Not Performing Well

Regardless of Software Type, Respondents ReportPerforming Best on Inventory Target Clarity

P&L Owners Perform the Lowest on Perceived Understanding Inventory Strategies

Those with Advanced Software Report Higher Direct Supervisor Understanding of Inventory Strategies

Agenda

Study Overview

Team Alignment Business Pain

Sales & Marketing Alignment Is Among Most Important andTop Performing

Greatest Gaps in Alignment:Manufacturing & Procurement, Operations & IT,

and Sales & Operations

Those with Advanced Software Report Higher Alignment forFinance, Specifically with Operations, Sales and Marketing

Agenda

Study Overview

Team Alignment

Business Pain

Increasing Business Pain Expected for Speed of Business,Risk, Talent, Value Networks, Globalization, Innovation,

and Regulations

Consistently High Pain Reported for Cross-Functional Alignment and Demand/Supply Volatility

Since Five Years Ago, Significant Decreases in Business Pain Reported for Software Usability

Increases in Business Pain Expected in Five Years Mostly for Increasing Speed of Business, Innovation,

Globalization, and Risk Management

From the Past to the Future, Highest Expected Increases in Pain Are for Speed of Business and Risk Management

Those with Basic Software Report Greater Pain withDemand/Supply Volatility, Strategy Clarity and Globalization

what drives inventory effectiveness in a market-driven world? summary charts

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