Multi-echelon inventory optimization

Optimize inventories across the network to improve service levels while lowering costs.

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Why MEIO?

Multi-echelon inventory optimization (MEIO) balances inventories across the entire distribution network, taking into account the interdependencies between echelons. Organizations that go beyond single-echelon inventory optimization (IO) offer highly competitive service levels and see a reduction in – or elimination of – stockouts.

An Aberdeen Group report states that companies using MEIO are twice as likely to meet the challenge of balancing cost and service levels across their networks than companies not using MEIO. The report further states that MEIO users are twice as likely to tie target-setting to their S&OP process. Companies that deploy MEIO obtain a 28% increase in inventory turns without any decrease in customer service levels. Supply chain practitioners have identified MEIO as a top priority.

MEIO helps organizations:

  • Optimize inventory strategies across the entire network.
  • Model with different inventory strategies.
  • See inventory reductions of 10-30% or more.
  • Increase service levels while cutting inventory.
  • Minimize investment balance while achieving service levels.
  • Automate the inventory planning process.

Support for omnichannel optimization

Optimize inventories across the entire distribution network, taking into account the interdependencies between echelons. Model and run what-if scenarios with different inventory strategies, including service levels. Support reduction of investment balance while achieving service levels. Automate more of the inventory planning process (manage by exception).

True lead time

Lead time has a huge impact on inventory levels, customer service, and finance. While most organizations have a supplier’s commitment for lead time, and plan based on lead time that is constant, it is far more effective to plan based on actual lead time, which varies. In general, the longer the lead time, the larger the safety stock and total inventory. Longer lead time also increases the dependence on forecast accuracy, which is why Vanguard’s unified planning system stands head and shoulders above the rest.

Support for bill of distribution and bill of material

Oftentimes organizations manufacture goods or ship products that include multiple items. This is called a bill of material (BOM) or bill of distribution. Other organizations may require kitting, a process of combining multiple SKUs together to create a new SKU. This can become very complicated; sometimes there are multiple nested BOMs. Vanguard Predictive Planning supports the most complex requirements in this space. No matter how lengthy the list of parts or how difficult the logic, from airplane engines to tanks, Vanguard likely has worked with a client with similar needs.

Automation of inventory strategies

There are infinite possibilities for inventory strategies. Vanguard enables organizations to create as many strategies as their business requires. What happens when an organization constantly launches new products, or products are evolving that require a reassessment of the correct inventory strategy? This is a time-consuming process for certain organizations. Vanguard Predictive Planning auto-assigns inventory strategies based on rules and attributes of items. This is a game changer.

Client Results

“Billions [of dollars] in operating margin and trillions in market capitalization separate supply chain winners from losers,” according to AMR Research. With Vanguard Predictive Planning™, best-in-class planners see:

15%

Reduction in inventory

17%

Increase in perfect-order fulfillment

35%

Shorter cash-to-cashcycle times

90%

Fewer stock-outs than competitors