ToolsGroup’s Multi-Echelon Inventory Optimization (MEIO) routinely generates million dollar ROIs via increased service levels, reduced stock-outs and improved inventory turns. This unparalleled effectiveness is the result of unique demand and inventory modeling technology specifically designed to overcome the gross approximations (and limitations) of traditional inventory approaches. Its proprietary analytical relationships between inventory levels and customer service have proven to be highly reliable, even for very slow moving and intermittent demand items. This allows ToolsGroup to optimize even very large assortments, including products in the “long tail”.
Typical inventory “segmentation” approaches (often incorrectly labeled “inventory optimization”) group SKU-Locations (SKU-L) into arbitrary “segments” and then apply “one size fits all” logic by assigning all SKU-Ls within the segment the same service level target. These approaches lead to poor recommendations, very distant from the optimum. ToolsGroup’s MEIO instead automatically assigns a different service target to each individual SKU-L, achieving the desired global service level while simultaneously yielding the mathematical optimum for the objective function chosen (options include minimum inventory investment, minimum storage space, maximum net margin, minimum obsolescence, maximum freshness and more).
ToolsGroup MEIO effectively optimizes even complex supply chains, including multiple distribution and manufacturing echelons. It can automatically suggest the right “decoupling points” and the adequate levels of materials, components, subassemblies and finished goods in any location of the entire supply chain, by optimizing the balance of inventories across different locations (optimal staging) and different Bill-of-Material (BOM) levels (optimal postponement).
Despite its power and level of sophistication, ToolsGroup MEIO is highly automated for an extremely low cost of ownership.