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

Supply Chain Insights LLC Copyright © 2015, p. 1

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


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

0.75

0.21875

0.03125

0.09375

0.09375

0.5625

0.3125

0.03125

0.125

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