Are you struggling with balancing inventory? Today, many Nordic businesses face major challenges in matching their inflated stock levels and assortment of products with changing customer demands. The quest to maintain a high service level while minimizing costs remains a top priority, although now it seems more difficult than ever. Fortunately, smart supply chain planning can unleash the potential of your inventory and pave the way for supply chain success.

Why do businesses struggle to balance inventory?

In the midst of a global pandemic that profoundly disrupted the global supply chain, our current macroeconomic landscape has taken shape. With significantly reduced shipping capacity and prolonged lead times from Asia, businesses faced the challenge of meeting customer demands by placing substantial orders to stock up on inventory.

Fast forward a few years, and we now find ourselves grappling with high-interest rates and inflation. These economic forces have propelled a significant change in consumer behavior. Consumers are now favoring more affordable products over their pricier counterparts. Consequently, businesses have also adapted their supply chain strategies, stocking more inexpensive items to cater to these changing customer needs.

High inventory levels and the wrong product mix

This shift, however, has unwittingly given rise to a particular problem – the overstocking of higher-priced items. The current product mix is simply mismatched and does not align with the new customer needs. This is now causing large financial strains on businesses.

Previously, when interest rates remained low, companies focused on providing a high service level, and they could maintain extensive product inventory without incurring significant costs. Now the scenario is vastly different. Obtaining desired stock has become increasingly expensive, and the bottom line is directly impacted by percentages.

To cope with this, many businesses find themselves resorting to significant discounts to reduce their inventories, or they simply hit the brakes in an attempt to handle the situation. However, this scenario may eventually lead companies to face a ”bullwhip effect”, resulting in empty shelves and disorganization throughout the supply chain.

High inventory levels and the wrong product mix

Discover the potential of your inventory

Instead, this situation calls for careful consideration of inventories to ensure a balanced mix of products. The more complex the supply chain, the more critical the inventory management. And as the complexity grows, so does the need for digitization, robust system support, and control.

For today’s companies, it is important to understand where the forecast lies. Keeping tabs on demand has always been valid, but it has now reached a new level of importance. The large expenses of maintaining product inventory heighten the need to align stock levels precisely with customer preferences.

Despite this, a vast majority of supply chain data correction is still today handled manually in Excel or via rigid and rule-based processes in ERP systems. These traditional systems are primarily designed for data input rather than supply chain optimization. This often leads to an accumulation of slow-moving items with irregular and sporadic demand patterns. As a result, businesses face increased costs and inefficiencies.

To maximize the true potential of your inventory, a System of Differentiation (applications dedicated to handling specific business needs to reach a competitive edge) – rather than a System of Record (applications and ERP systems dedicated to handling the most basic and critical data need and processes) – is required.

Use a smart supply chain planning platform

A smart supply chain planning platform can be tailored to optimize a company’s specific supply chain operations. It leverages advanced algorithms and intelligent automation to provide the insights needed to make informed decisions and take proactive actions.

A modern supply chain planning system will provide a high service level for the end customers by securing the right product mix, while still keeping inventory levels low.

Companies can maintain a high service level not only during peak periods or with high-volume items but also with products sold sporadically. It ensures an efficient operation while keeping inventory levels low or at their optimal point.

By implementing the right system support, businesses can experience remarkable cost savings. On average, stock levels can be reduced by as much as 30%. Imagine the impact that saving such a significant amount of money can have on your bottom line.

Moreover, a smart supply chain planning platform eliminates the need for manual work. Automating time-consuming tasks liberates planners to focus on more rewarding activities, such as proactive risk assessments. This allows them to contribute strategically to the company’s success and drive growth.

To sum it up, your company will benefit from a higher level of service, ensuring customer satisfaction and loyalty. Simultaneously, inventory levels will be optimized, enabling you to strike the delicate balance between meeting demand and minimizing excess stock. Furthermore, the automation provided reduces operational inefficiencies and streamlines your processes, paving the way for increased productivity and profitability.

A large network of supply chain experts at your service

At Optilon, our expertise stems from a rich 30-year integration heritage, empowering us to seamlessly integrate solutions for production planning, demand forecasting, inventory optimization, and replenishment. With a vast network of 50 supply chain experts in the Nordics, we offer unparalleled support to our clients.

Don’t settle for outdated methods. Contact us today and discover how we can help you transform your business. It is time to step into the future of supply chain planning.


Let us help you unleash the potential of your inventory. Book a meeting today!

Welcome to a Recap of The Optilon Supply Chain conference 2022, held on September 8, 2021.

Disruptions come in many forms, and in recent years Supply Chains have faced numerous highly disruptive risk events. Supply Chains are also influenced by sustainability, customer demand precision, and customization in delivery.

A proactive response requires visibility, adaptability, and agility. For many companies, this means re-imagining the Supply Chain and balancing the tradeoffs in new and effective ways.

This year’s topics

  • SUSTAINABILITY

  • DATA-DRIVEN

  • DISRUPTION

  • TALENT DEVELOPMENT

  • COLLABORATION

About the event

This premium event is dedicated to helping optimize the business through the Supply Chain. Our emphasis is on enhancing experiences and embracing disruption and innovation to re-imagine the Supply Chain and build competitive advantages.

Join leading thinkers and practitioners at the Optilon Supply Chain conference to explore best practices, opportunities, and challenges of optimizing the business through the Supply Chain.

Why watch the recording?

You will get an insight into:

  • How do Nordic companies perform compared to others in terms of sustainability?
  • How mature are my organization’s current capabilities?
  • What could I gain by better collaborating with my network?
  • How is customer behavior changing, and how do my relationships with customers need to change due to disruption?

Key-Take-Aways

While trying to re-imagine the future Supply Chain – at this conference, Optilon would like to support your journey with inspiration on:

  • Why is there a need to disrupt our current way of living, working, and being
  • How you can harness the power of data and create competitive advantages
  • How can you empower and engage your employees in the sustainable agenda and ensure progress
  • Why collaborating with the broader ecosystem is key to responding to the broader ecosystem

This year’s conference was again carried out in a dynamic environment with inspirational speakers worldwide. Come and join us. It is free and online!

Who should watch it?

  • Supply Chain Managers
  • COOs
  • Production Managers
  • S&OP Managers
  • Planning Managers
  • Planning Professionals
  • Supply Chain Data Analysts
  • IT Managers
  • Sustainability Managers and Professionals
  • CEOs and CFOs
  • Head of Digital Transformation8
Watch all of the recordings here

The Optilon Supply Chain Sustainability Minifestival took place from February 21st to February 25th 2022. Watch or rewatch all the exciting sessions whenever you like.

Delivering on Circularity

Monday we had a great start with a very dynamic and knowledgeable speaker, Gitte Haar, from Center for Circular Economy who introduced us to the Circular Economy and the legislation which the EU is imposing as well. We looked at what impact it could possibly have on businesses.

After that, we had a very dynamic panel debate between Marcel Jacobs, Philip Morris, Gitte Haar, and Havard Jørgensen from Electrolux. You can watch the recording here. 

Supply Chain Design and Sustainability – Accelerating the Net Zero emissions journey

We had the pleasure of having Anders Remnebäck and Andreas Andersson on stage from Optilon. They are both very experienced when it comes to adding the Sustainability angle to Network Optimization/Supply Chain Design. They have in this webinar focus on how you can accelerate the journey to NetZero emissions. You can watch the recording here.

Supply Chain Sustainability Software Pitch-Contest

During this session we had invited 6 different start-ups from across Europe to do a pitch. All of them showcased how their company specifically is trying tol solve the Sustainability challenges with their software. The company Prewave won. You can watch the recording here.

Supply Chain Planning and Optimization from a Sustainability Perspective

During this session Optilon’s experts within Supply Chain Planning, John Wikstrom and Nathalie Johansson, introduced us to how you can use Supply Chain planning to reduce your carbon emissions. As Optilon has discovered in previous reports, 1/5 of what is in stock is unnecessary. You can watch the recording here.

The Regenerative Supply Chain

The terminology Regenerative Supply Chain is not yet widely recognized in the Supply Chain field. In this session we looked a little bit deeper into the terminology in order to try and understand what impact it could possibly have. Assistant professor at Århus University Henning De Haas gave an introduction to his understanding of the Regenerative Supply Chain. He put emphasis on the fact, that mental models play a vital role. After that, August Krogh From Slowforest Coffee introduced us the company he works for. They have already laid out the plans for their Regenerative Supply Chain. You can watch the recording here.

Learn more about Options sustainability offerings here

Today’s challenges in production companies

The typical business or Supply Chain operates in a world where the ”new normal” is increased instability, brought about by a multitude of causes. Supply Chains must become more agile, resilient, automated, and efficient. This is also true within production. 

Do you encounter the following challenges in your production?

  • Are your service levels low?
  • Do you have a high inventory and capital tied up in stock
  • Is it cumbersome to reschedule the production plan?
  • Do you have a low level of automation in your processes?
  • Are you lacking an overview and one joint production plan?
  • Are you able to simulate?

Where and how much to produce
It is essential for the business to address when, where, and how much to produce to maximize service levels and production efficiency while minimizing inventory and production costs. Effective plans are enabled with Supply Chain Production Planning technology. 

In the mid-to-long-term perspective, a feasible and leveled production plan supports production management for capacity/manning decisions and the requirements of purchase materials. In the short term, a realistic production schedule is created to support production supervisors/operators in producing the right order at the right time, ensuring high service levels and minimized set-up times.

Real-time simulations
In other words, a Supply Chain Production planning solution helps effectively and timely govern the core processes of advanced planning, scheduling, and manufacturing execution. The lean, flexible and interactive tool is designed to run real-time simulations and thoroughly analyze results, following intuitive and streamlined workflows.

At Optilon, we can help you implement effective processes through cutting-edge technology to:

  • Obtain a high degree of automation and reduce manual work for planners
  • Reschedule plans faster when prerequisites changes
  • Obtain higher service levels and reliability of promised delivery time
  • Get a lower inventory and capital tied up in stock
  • Minimize set-up time and production costs – and increase resource efficiency.
  • One common plan. Better overview and company-wide decision and communication platform.
  • To be able to work more proactively and see future problems in advance.

The typical business or Supply Chain operates in a world where the “new normal” is increased instability, brought about by a multitude of causes. Supply Chains must become more agile, resilient, automated, and efficient and this is also true for the production. environment.

Many companies are challenged by cumbersome processes to reschedule production plans, high inventory and capital tied up in stock, low level of automation, no simulation possibilities and a lack of overview and a lack of one common production plan.

Cases

Absolut company
An increased production complexity made The Absolut Company look for a better and more efficient way to manage the production of the most exported food and beverage product in Sweden. With the purchase of the company from the Swedish government in 2008, Pernod Ricard initiated a transformation of the brand. This had a large impact on the manufacturing process. Check out the case here.

Orthex company
Orthex  Group,  a  leading  manufacturer  of  household  products  in  the  Nordic, operates in a sector where the customers have high demands on short lead times and on-time delivery. When unexpected large orders are common and the company growth  increases Supply Chain complexity, it puts pressure on the production planning process and the planners involved. By implementing technology Orthex has been able to take a big step towards 100% planning control Check out the case here.

Understanding inventory optimization is key if you want to optimize your Supply Chain with technology. In this blogpost we will look into the details.

Today’s consumers demand more options and greater variety. Trends change quickly. The result is that companies are carrying more slow-moving items with irregular, intermittent demand patterns. Traditional ABC inventory planning, developed in the 1950s, just doesn’t work in this world. Instead, we suggest to use inventory optimization software. It should use self-adaptive demand and inventory models to automatically define the optimal mix of inventory across the multi-echelon Supply Chain. That way you can achieve aggressive service level targets while minimizing inventory and reducing costs, at the same time. As a company you are able to manage slow-moving and intermittent demand items more effectively.

The model is highly reliable because of the proprietary analytical relationships between inventory and customer service levels, even for very slow moving and intermittent demand items. This allows the system to optimize even very large assortments, including products in the “long tail”, balancing inventories across different locations and different levels in the bill of materials (BOM).

Meet high service levels while minimizing inventory
Instead of creating a “one-size-fits-all” inventory mix within item groups defined by rudimentary classification criteria, the inventory optimization approach differentiates service and inventory targets across products, bill-of-materials levels, and distribution network locations to most efficiently meet desired customer service level objectives.

Free up working capital
By applying advanced modeling and artificial intelligence (AI) to optimize inventory at the individual SKU and location level, you are typically able to reduce overall inventory levels by 10-30%. Less money tied up in inventory means you have more cash available for better uses.

Inventory modelling
The inventory modeling technology is capable of eliminating the gross approximations of traditional inventory management, creating very reliable relationships between average inventory and service levels for each SKU and location. This allows the inventory optimization solution to define the optimal inventory mix across products and network to meet service targets at the lowest cost.

Service-driven optimization
Unlike ABC inventory planning, which has an operational perspective, service-driven inventory optimization centers on sales, marketing, and customers. It uses categories called ”service classes” that sales and marketing people can easily relate to. Then it optimizes every SKU-Location against a target service level for each service class. The end result is an aggregated service class goal with the lowest possible stock investment.

Multi-echelon inventory optimization (MEIO)
To truly serve the end customer, the entire network–from raw materials suppliers and factories through distribution centers and wholesalers–needs the right items in stock. The technologies which we favor suggests optimal inventory levels at each stage of the supply chain, simultaneously balancing across multiple echelons, locations, and different Bill-of-Material (BOM) levels. It finds the most globally efficient balance between upstream and downstream inventory while optimizing safety stocks. It supports centralized demand planning, lowers costs across the Supply Chain, and streamlines operations.

Probabilistic forecasting
The probabilistic forecast provides the foundation for inventory planning, and helps manage the risk that comes from demand volatility by providing a range of possible values with their probability of occurrence. Advanced machine learning enhances traditional demand forecasts by modeling internal sources of noise and incorporating the effect of external data.

Understanding inventory optimization is key if you want to optimize your Supply Chain with technology.

If you want to know more about Supply Chain from an end-to-end perspective then you can always check out this online-brochure or download our whitepaper via the below link. 

 

Download now

1. Getting started with a modern approach to end-to-end planning

Understand the basics of end-to-end planning (whitepaper)
End-to-end Supply Chain planning is about bridging the gap between operations and business plans. It is also about staying in control. Check out and download the whitepaper right here. 

You can also read a shorter blog post on what Supply Chain planning is right here.

Do you also have unnecessary items in stock? (Trend report)
Did you know that every fifth item in stock is unnecessary? We made a report based on the 400 largest companies in the Nordics. Learn more about our findings and what you can do to ensure that this is not your company. You can download the report here.

2. Understanding more about the details

Understanding inventory optimization (blog post)
You can achieve aggressive service level targets while minimizing inventory and reducing costs simultaneously. Learn more about how right here.

How an end-to-end Supply Chain planning approach can benefit the business
Having an end-to-end Supply Chain planning approach can turn out to be a competitive advantage in the market. Though, to leverage your Supply Chain for a competitive advantage, it is important to utilize technology to add business value. In this blog post, we will share how it can benefit the business strategy.

Are you going to use a digital twin? (blog post and webinar)
Looking to learn more about a digital twin and how it can help you on your end-to-end Supply Chain planning journey? Check out these resources on the digital twin right here. You can also watch a webinar and read about SKF, who made a digital twin part of their core journey and won the Gartner Chainnovator Award in the Industrial Segment. Optilon supported them all the way – and still do.

Why ABC inventory classification is old school and not optimization (blog post)
ABC inventory classification has been around so long that most planners assume it’s the only way to segment inventory. In fact, it’s not. And it’s not even nearly the best way. Read more in this blog post.

Is the working relationship between operations and marketing an area for optimization? (blog post)
In many companies, the working relationship between operations and marketing is challenging. This is where technology within promotions planning can help.  Promotions planning is about bridging the gap between operations and marketing. Read more in this blog post. 

3. Check out these great cases:

 4. Get a brief product demonstration right now

This brief product demonstration explains the core capabilities of the service-driven planning software we provide with our partner ToolsGroup. The video also describes why it’s different and better than traditional planning solutions. 

It covers:

  • Demand modeling and forecasting
  • Promotions planning
  • Multiechelon inventory optimization
  • Replenishment
Get the product demonstration right now

5. Finding the right partner

Supply Chain organizations must rapidly assess new digital strategies and Supply Chain planning technology solutions to accelerate digital business. At the same time, they need to evaluate and identify automation opportunities while supporting organizational change. How do they stretch their organization’s current way of thinking and operating while simultaneously delivering on speed and flexibility? Get some fruitful advice in this blog post.

We are here to help you choose the right journey
Our engagement model shows you how we work together with our clients. We want to ensure that you get a humble, engaged, and committed solution delivery that solves your business challenges. Learn more about how we work right here. 

Are you heading out on your Sales and Operations Planning journey or have you already embarked on it? This ressource will provide you with lot’s of great content which hopefully can inspire you, to take your Sales and Operations Planning approach to the next level.

1. Getting the journey started

The basics of S&OP
Everyone has probably heard about S&OP, but do you really know what it is? In this blog post we provide you with the basics on S&OP. Read more here.

What value do you get from S&OP?
Like any other business initiative S&OP should be challenged on value impact. In this blogpost we would like to provide you with some insights. Read more here.

Digitalizing the S&OP process untaps further potential
The digitalized version of the S&OP process is recognized to further increase forecast accuracy, as well as reduced inventory investment and stable/increased service level. Read more here.

The myths and realities of Sales and Operations Planning
Chekcout this webinar which is a dynamic discussion of what S&OP is and is not. Listen or watch it here.

2. The details

Bring strategy back into S&OP
It is time to bring strategy back into S&OP. But how? Learn more in this webinar.

Welcome to a Recap of The Optilon Supply Chain conference 2021, that was held on September 15th 2021.

The overall theme for this conference was: Thriving in uncertainty. Preparing for the future. 

Why is this topic interesting?
Supply Chains are typically designed for efficiency, cost, and proximity to markets, but not necessarily for transparency and resilience. Now they are operating in a world where disruptions are regular occurrences. Both business-to-consumer (B2C) and business-to-business (B2B) companies expect to see meaningful shifts in future demand. This will affect commercial models. Thriving in uncertainty and preparing for the future means building resiliency by improving the Supply Chain and transparency, minimizing exposure to shocks, and building the capacity to respond.

Below you will find an outline of the speakers of this conference:

Block 1:

Speaker Matt Britton on the topic of: Understanding the conscious consumers of tomorrow.
Matt is a true leader when it comes to connecting the dots between the brands of today and the consumers of tomorrow. Matt has inspired and educated the world’s leading brands, on the state of the new consumer and its effect on business models and consumer trends. Listen to this energetic talk and learn how your brand and business will be affected by the conscious consumer.

Speaker Thomas Bjørnsten on Improving business intelligence with human data.
One way of working with resiliency is to work with end-to-end transparency and demand shifts. Thomas Bjørnsten, Phd. works with human data at Innovation Lab. In his speeech he provides insights into facts and fantasies when it comes to the human factor in a data-driven business. He teaches about emotion computing and how feelings can become big (data) business. He also shares how the interactions will be between humans and machines and discuss the role of trust in adoption.

Speaker: Marketing Associate at Optilon John Wikström on the topic: The unredeemed Supply Chain potential in the Nordics. 
Nordic companies have a potential to redeem a significant potential when it comes to unnecessary inventory, tied up working capital and unnecessary square meters used for storage and distribution. Speaker: John introduces us to the report, which this year covered all the Nordic countries, named The unnecessary report 2021. John shares the possible actions that can be taken to redeem the potential.

Watch the recording from block 1

Block 2:

Panel discussion on how you can realize the full potential of Supply Chain sustainability
In the panel we had Thought Leader and strategic advisor Alis Sindbjerg Hinrichsen from Optilon, Karl Orrling from Alfa Laval and Eva Grønbjerg Christensen from Sustainify.

Speaker: Manuel Maihofer on the topic of: Improve your end-to-end planning with a digital twin
Companies that utilize the digital capabilities of Supply Chain planning will be much more resilient and better equipped to handle challenges, as well as competing more effectively. What does that mean in practical terms? Manuel Maihofer, Business Analyst and Project Manager from SKF focuses on how a digital twin could be an enabler. Manuel Maihofer is convinced, that transparency, business intelligence and digitalization of processes are key facilitators to improve supply chains. Manuel manages agile IT development projects, establishes workflows and turns data into insights, from purchasing to customer service and from production planner to top management. He plays an important role in creating SKF’s digital twin, which fuels initiatives like Integrated Planning, Demand Management and S&OP.

Watch the recording from block 2

Block 3:

Speaker: Andreas Wieland on the topic of: Transformative Supply Chain Management
Andreas Wieland is an Associate Professor of Supply Chain Management at Copenhagen Business School. He is the Program Director of CBS’s Graduate Diploma (HD) in Supply Chain Management. His current research reinterprets global Supply Chains as social–ecological systems. Global supply chains can be quite complex. Many managers have understood this. But maybe supply chains are even more fundamentally different from what we often imagine? In his talk, Andreas Wieland challenges the conventional assumptions we have about supply chains and supply chain management. He provides transformative solutions to futureproof supply chains in an era of crises.

Speaker: Andrew Spence on the topic of: Transforming the world of work with technology
Andrew talked about how organizations will be able to find the talent they need – when they need it – from a liquid workforce. Hence, they will require fewer full-time employees, and we will see the demise of the traditional job. The focus will be leading work, not employees. What does this mean in the short and long term?

watch the recording from block 3

The Unnecessary Report 2021 once again shows and enormous and unutilized potential for Nordic companies – every fifth stock item is unnecessary. More than a fifth of the inventory is unnecessary for Nordic companies, according to a new report released by Optilon. The average company has an untapped potential of EUR 48 million – which could instead be invested in more growth-promoting purposes. The total figure for the Nordic region’s 400 largest companies amounts to EUR 19 billion.

Effective inventory management and optimization can have a major impact on a company’s profitability. Optilon’s newest publication The Unnecessary report 2021 – which has studied 400 different companies across the Nordics show, that 22 percent of the items in stock are unnecessary for the average Nordic company. This means that they have more goods in stock than they need. 

Removing an unnecessary item from the warehouse means not only less tied-up capital, but also less warehouse space, reduced distribution and administration costs and obsolescence. By addressing this and implementing effective inventory management and optimization the average company among the Nordic region’s 400 largest companies will be able to gain around EUR 48 million. Supply Chain has perhaps never been more important. The covid-19 pandemic and the prevailing macroeconomic situation have demonstrated the importance of robust and sustainable supply chains. Having fewer but the right articles in stock gives you more optimization power as a company. You free up capital at the same time as you reduce costs and increase your revenue.

Effective inventory management is an underestimated success factor. It is one of the single biggest measures you can take as a company to maximize your competitiveness. It simply ensures that the resources are used in the right way and where they generate the most value.

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Join us at the Optilon Supply Chain Conference 2023!

Learn from experts and supply chain leaders, and discover innovative solutions to help you stay ahead of the game. This event is free but there are limited tickets available.

Read more