Supply Chain Planning Benefit Calculator

How much could your business benefit from service-driven supply chain planning that increases service levels while reducing inventory?

See how much you could improve:

Net Profit

Net Profit

Revenue

Revenue

Inventory Levels

Inventory Levels

Inventory Holding Cost

Inventory Holding Cost

Get your customized benefit report in 5 easy steps.

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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First, what is your industry?

Industries Distribution

Wholesale/Distribution

Industries Retail

Retail

Players in Supply Chain_Factory

Manufacturing

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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What can service-driven supply chain planning add to your bottom-line?

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%

Adjust slider to customize for your own company

Industry Average

Adjust slider to customize for your own company

Industry Average

Lost Sales Ratio is that portion of sales that are lost when the product is out of stock and not available. Typically, branded products have a 40% lost sales ratio, meaning that 40% of the time that the company is out of stock, customers will choose a product from another company, rather than wait or buy a different product that you offer. Procter and Gamble says that among consumer products companies, a lost sales ratio of 28% is considered close to best in class. Commodity products usually have much higher lost sales ratios.

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Service Level is the expected probability of not hitting a stock-out or not losing a sale. You can also think of Service Level as the probability of being able to service the customers’ demand without backorders or lost sales. While a 100% service level – i.e. service all customers all the time – might appear desirable, it is usually not a feasible option.

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Target Service Level is the service level you are seeking to achieve. It can be higher or lower than your current service level, but in most cases businesses are seeking to improve their service. Typically service level improvement ranges from 1-5pp, but can be higher if the company currently is achieving less than a 90% service level. One gross rule of thumb is that you should be able to reduce stockouts by half and still achieve some inventory reduction. To break this down, a company that is achieving a 90% fill rate should be able to improve to 95%, a 5pp improvement. A company that is achieving a 96% fill rate, should be able to improve to 98%, a 2pp improvement.

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These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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How do you currently manage your inventory?

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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Potential revenue impact

Here is an estimate of the potential impact that service-driven supply chain planning can have on your bottom line:

Impact on Revenue

Current Revenue
$1,000,000
Potential Revenue
$1,100,000

Increase of
$100,000

Potential Impact on Net Profit %

54%

Potential Impact on Net Profit $

$100,000

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The Impact on Net Profit is directly on Net Profit, not only Gross Profit. This is because the additional Revenue carries only direct costs, hence entire gross margin is added to the bottom line.

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These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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What can service-driven supply chain planning do for your working capital?

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Enter your average inventory and we'll calculate your current
inventory turns. You'll then have the option to adjust it.

Industry Average

Adjust slider to customize for your own company

Industry Average

Average inventory is the mean value of inventory during the fiscal year and is computed by averaging the starting and ending inventory values over that period

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Inventory Turn shows how many times a company has sold and replaced inventory during a given period. A company can then divide the days in the period by the inventory turnover to calculate the days it takes to sell the inventory on hand. A low turnover implies weak sales and possibly excess inventory, while a high ratio implies either strong sales or insufficient inventory.

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The initial value for Current Inventory Turns is set using the information you provided. It is equal to the Cost of Goods Sold divided by Average Inventory.

Inventory Turn shows how many times a company has sold and replaced inventory during a given period. A company can then divide the days in the period by the inventory turnover to calculate the days it takes to sell the inventory on hand. A low turnover implies weak sales and possibly excess inventory, while a high ratio implies either strong sales or insufficient inventory.

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Inventory Holding Cost % should be the sum of both cost of capital and the operational costs associated with carrying the inventory.

  • In a low inflation environment, a typical cost of capital is 8-10%.
  • Operational costs vary greatly depending on the product. Products with high obsolescence (e.g., fresh food, electronics) should have high inventory carrying costs. Products which require expensive warehousing (refrigerated foods, dangerous goods) will also. A low operational cost may be 5% but can be much higher.
  • Total inventory carrying cost % (cost of capital + operational costs) is rarely below 15% and can be much higher.
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These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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Learn the potential inventory impact

Download a summary report of this benefit analysis

You will also receive information about additional benefits service-driven planning can have on your business along with some valuable resources that can help you build a business case.

By submitting this form, I agree to the storing and processing of the information I submit on this form by ToolsGroup in accordance with its Privacy Policy.

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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Don't Overlook Additional Benefits

Tangible benefits such as profit margin, lost sales and inventory are just some of the benefits of supply chain planning investments.

There are additional benefits that impact the bottom line, that are a bit harder to quantify. While they may vary across supply chains, they can be significant none the less. As you build a business case for investing in supply chain planning technology, don’t overlook these additional measurable benefits.

Reduced premium freight costs from expediting fewer shipments
Reduced premium freight costs from expediting fewer shipments
Transfer cost reduction
Transfer cost reduction
Less overtime
Less overtime
Planner productivity increase and less time spent firefighting
Planner productivity increase and less time spent firefighting
Reduced IT infrastructure cost
Reduced IT infrastructure cost

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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Potential inventory impact

Here is an estimate of the potential impact service-driven supply chain planning can have on your working capital.

Impact on Inventory

Current
$1,100,000
Potential

$1,000,000

Potential Inventory Reduction

$100,000

Impact on Inventory Holding Costs

Current
$1,100,000
Potential
$1,000,000

Potential Inventory holding cost reduction

$100,000

These results are based on historical data and are not intended to be a quote, guarantee or proposal. Please contact a ToolsGroup specialist to discuss your business and what results you can expect.

 

Please note: Your company information and results will not be shared and will be stored and processed in accordance with ToolsGroup’s Privacy Policy.

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Looking for more tools for building your supply chain planning business case?

Blog

Tips for Getting Executive Buy-in for Supply Chain Planning Software

Executive Brief

How to Calculate Inventory and Service Level Improvements from Supply Chain Planning Software

Supply chain planning (SCP) software is critical to driving profitable growth and providing agility in an ever-more-competitive and fast-paced environment.

Gartner

Gartner: How to Build a Strong Business Case for Your Supply Chain Planning Technology Investment. Alex Pradhan, published 7 June 2019.

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