(openPR) Intentia releases new solution to reduce finished goods inventory
New Stock Build Optimization Solution Increases Profitability for Food and Beverage Companies by Improved Calculation of Seasonal Needs
July 11, 2005 - Stockholm, Sweden: Intentia International AB (publ) (XSSE:INT B), a global enterprise solutions provider for manufacturing, distribution and maintenance industries, has released a stock build optimization solution that maximizes food and beverage manufacturers´ stock mix and reduces surplus finished goods inventory by up to 20 percent to avoid stockouts and product waste.
Intentia´s stock build optimization solution tackles one of the major issues facing the food and beverage industry - the need to build stock to meet seasonal peaks and promotional spikes. According to reports from the Food Marketing Institute and Grocery Manufacturers of America, product waste is estimated to have cost food manufacturers USD 2.57 billion in 2004*, and USD 6 billion in lost retail sales from stockouts, which run as high as 13 percent during promotion periods**.
The solution processes a wide spectrum of business variables that impact stock exposure risk. Today, manufacturers rely heavily on spreadsheets to calculate stock builds, which becomes unmanageable given the number of products and factors to navigate such as changes to capacity, shelf-life and cost constraints, margins, new products and changes to recipes and manufacturing processes. In fact, according to a measurement formula created by Intentia, the level of stock build complexity increases exponentially with the number of production lines and products planned. For example, increasing the number of products from two to four over a 12-week planning period increases the data complexity by a factor of 100, and from two products to six by a factor of 10,000.
"The complexity of calculating stock builds increases exponentially as the number of products increases, and there is extra profit waiting to be taken and working capital waiting to be freed up," says Andrew Dalziel, the supply chain management product director at Intentia. "Our industry knowledge puts us in an excellent position to understand the difficulties in stock builds to meet forecast demand during seasonal and promotion periods. Our solution has been developed to reduce the risk for manufacturers that are often left with excess product that will likely exceed its shelf life, while stockouts occur on other products."
The Stock Build Optimization Solution Up Close
By calculating the optimum target stock per period by product stockkeeping unit (SKU) to meet peaks based on demand forecast, available production capacity, existing inventory and costs, the stock build optimization solution creates a time-phased stock plan in a matter of minutes that optimizes customer service levels and profit margins, thus eliminating over-stocking and the risk of product waste. The solution also incorporates the shelf life of each product regardless of whether products are stored under room temperature, chilled or frozen conditions.
During the stock build optimization process, the solution evaluates the cost impact of alternative manufacturing processes, production costs and stock holding costs to ensure that all possibilities are explored. In addition, maximum and minimum stock levels and days´ coverage of stock are taken into account during the stock build process.
In addition to managing these complex variables, Intentia´s stock build optimization solution provides manufacturers with the opportunity to collaborate with retailers by creating promotional scenarios and proposals that can utilize spare capacity and inventory.
The solution has the added advantage of requiring little or no alteration to current business processes. It runs on a PC with Windows XP, and takes approximately 15 to 20 days to install with limited resources required from the user company.
Intentia is very confident that it can deliver a high return on investment to manufacturers from the onset of deploying its stock build optimization solution.
Editor Notes:
* Food Marketing Institute and Grocery Manufacturers of America, 2004: 2004 Unsaleables Benchmark Report.
** Grocery Manufacturers of America (GMA), 2002: Reducing Out-of-Stocks Will Put $6 Billion in Retail Sales into Play Annually (2002), White Sulphur Springs, June 10.
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About Intentia
Intentia is the only global enterprise solutions provider 100% dedicated to bringing software applications and consulting services to companies whose core processes involve manufacturing, distribution and maintenance - what we call the "make, move and maintain" market.
- 100% of our resources are committed to this market.
- 100% of our software is designed for this market.
- 100% of our experience is in serving this market.
Intentia customers are typically medium to large organizations that operate in complex supply chains with tough competition and limited internal resources. They require the reliability, experience and security of a substantial supplier with the flexibility and specialist knowledge of their industries and processes.
Intentia solutions are built from the ground up with the specific needs of these customers in mind, and the ability to grow and change easily with their businesses. They simplify complex processes, anticipate customer demands and deliver added value in both the short and long term - making them the intelligent choice.
Intentia was founded in 1984 and serves over 3,000 customer sites in some 40 countries around the world. Our business solutions currently comprise enterprise management, supplier relationship management, customer relationship management, supply chain management, value chain collaboration, enterprise performance management and workplace management.
Intentia is a public company traded on the Stockholm Stock Exchange (XSSE) under the symbol INT B.
Intentia
The Intelligent Choice
