Predictive method of inventory optimization in industrial manufacturer performance

Abstract

Strong collaboration in supply chain at B2B market may improve operational and financial performance of both suppliers and clients. Need for collaboration benefits realization is especially actual for supplying manufacturers with huge investments in inventory as well as high ordering and carrying costs. Traditional stock level optimization models rely on historic data which makes them inefficient when supply if influenced by changing customized demand of key B2B clients. Strong collaboration with key clients, synchronization of planning process through the whole supply chain up to the end user and a forward-looking demand adjustment (ΔD, %) to the forecasting model are suggested to improve efficiency of planning. The model is validated at the B2B industrial manufacturer with positive effect. Application of the demand adjustment reorients the whole inventory planning practices towards a proactive approach that lead to a higher operational and financial efficiency.