How to Break Down Business Silos in Your Supply Chain

5 min read

Tags: Blog, Demand forecasting, Inventory management, Technology, Tips & Tricks

Daniel Fritsch   December 29 2014


Break Down Business Silos in Supply Chain

Index

  1. 3 Ways to Break Down Business Silos in Your Supply Chain
  2. Who Benefits from Breaking Down Inventory Management Silos?

It is safe to assume most organizations today struggle to break down the barriers of business silos. The silo mindset is an age old problem that does not appear accidentally or by coincidence in supply chain management. Silos are more often than not the result of leadership or management teams that are driving against competing agendas.

3 Ways to Break Down Business Silos in Your Supply Chain

The first step to overcoming this hurdle is to get everyone across the entire company on the same page and aligned around the same Key Performance Indicators (KPI’s), which is easier said than done!

Breakdowns can take on a variety of different looks and feels from departmental mandates, historical worst practices within teams or even technology driven divisions within an organization. When it comes to inventory management, there are three ways to align your company to break down silos.

  1. Align your PEOPLE
  2. Align your PROCESS
  3. Align your TECHNOLOGY

From a people perspective, the big question distributors and manufacturers should be asking themselves is, “how can we as an organization lower our company wide inventory levels while delivering higher service fill rates for our customers?”

From a process stand point, if a company can align around a common set of KPI’s that focus on lowering inventory levels and raising service levels then that company is well on its way to breaking down the barriers within their supply chain.

Who Benefits from Breaking Down Inventory Management Silos?

From a technology perspective, everyone from the business owner to the finance director to the IT manager will see process improvement from adopting more advanced inventory management tools. Software solutions like EazyStock enable companies to easily attach advanced demand forecasting, inventory planning and order replenishment tools to their existing inventory management system (like ERP’s) to provide one system for all parties to more efficiently and effectively manage inventory practices.

From planning the next fiscal year all the way down to the daily reordering of raw materials, every stake holder in the supply chain will have visibility to the company-wide plan. But, enough about EazyStock, let’s dive into who benefits from inventory optimization and how. Let’s start at the top and work our way down.

1. The Company Leaders

Persona_-Management-Head-ShotHappy CEO’s typically have happy customers. Happy customers are loyal customers. Loyal customers result in long-term sales for the business. Company leaders and business owners benefit from inventory optimization by improving overall service levels and fill rates of product delivery because they put their customer at the center of their supply chain.

Inventory optimization software enables inventory managers with controllable item level management to ensure the right quanties of stock are always on hand when demand comes knocking. CEO’s also see the money saved by keeping faster moving products at higher service levels while reducing the excess stock of slower moving products from inventory.

Through more accurate forecasting, planning and inventory replenishment, business leaders can unlock predictable improvements to customer service. Better customer service means happier, stickier and longer-term customers.

Company leaders report the following process improvement measurements when using EazyStock:

  • 5-10% increase in order fill rates and on-time delivery
  • 30-50% reduction in out of stocks and order lead-time variability

2. The Financial Planners

Persona_Finance-Head-ShotProcurement, purchasing, finance, replenishment. These are all terms used in the supply chain industry to define the money managers. To the financial planner, reducing costs and capital tied up in the business is of paramount importance. One way to quickly realize better cash-flow is by reducing excess inventory in your warehouse. Inventory by its very nature is expensive. By reducing excess or unnecessary inventory, a financial planner can have an immediately positive impact on the company’s bottom line.

EazyStock for instance helps financial advisors to free up cash flow by reducing investment tied up in excess and obsolete inventory across ALL of their warehouse locations. Through smarter forecasting, planning and inventory redistribution best practices, reordering needs will decrease and “bad inventory” levels can be almost completely eliminated from the balance sheet.

When inventory is properly managed there is always more cash flow available to accelerate growth in other areas of the business.

Financial managers report the following after leveraging EazyStock:

  • 15-30% reduction in inventory and working capital costs
  • 20-40% reduction in inventory carrying and obsolescence costs

3. The Inventory Managers

Persona_Operations-Head-ShotIt might be obvious at this point that the inventory managers have the most to gain from breaking down the silos created within supply chain operations. Inventory managers often find themselves stuck in the middle trying to please the executive team’s goals of higher service, while trying to reduce inventory levels for finance, while trying to fine tune their own inventory operations across multiple warehouse locations.

With all those competing priorities it becomes overwhelming and almost unattainable to manage all these requests manually without system support. Luckily with cloud based solutions like EazyStock, all those competing priorities can be efficiently managed and reported out across the business for a 360 degree view of the supply chain. By extending ERP data for optimization, inventory planner productivity is increased and the processes of demand forecasting, planning and order replenishment become a company wide exercise.

Inventory Managers report the following metrics after leveraging EazyStock:

  • 20-30% reduction in time used in expediting orders
  • 10-20% reduction time spent on manual inventory planning processes

4. IT Managers

Persona_IT-Head-ShotSystems managers are often the last to be brought into the conversation about major changes that have been pushed from the “top down”. Most supply chains rely on ERP systems for basic management of inventory. Most ERP implementations are costly to build and maintain and the topic of “integration” with other systems is enough to scare off almost any IT manager.

However, with EazyStock, all inventory optimization activities are managed in the cloud and are visible company wide in one centralized system. With no investment into hardware or infrastructure, IT Mangers have the ability to rapidly extend inventory management systems like ERP’s or home grown legacy inventory management systems to provide critical supply chain data to the other areas of the business.

Systems like EazyStock reduces a company’s IT dependency on legacy technology and seamlessly integrates with any ERP system to automate manual forecasting and planning practices. At the end of the day, the IT manager looks like the hero for breaking down business silos across the entire supply chain.

IT Managers benefit from the following when using cloud based solutions:

  • A secure Software-as-a-Service (SaaS) platform for users
  • Simple ERP plug ins for any legacy ERP system
  • Low-cost, predictable monthly SaaS subscription
  • Software upgraded automatically twice per year
  • IT hardware and software maintenance included
  • Dedicated customer support specialists for EazyStock users

Let’s revisit that initial question; “how can we as an organization lower our company wide inventory levels while delivering higher service fill rates for our customers?”

With EazyStock, businesses that manage complex supply chains can now easily forecast demand, plan more accurate inventory levels and save money by fixing poor replenishment practices.

 

Find out more on how optimizing your inventory operations aligns the company from top to bottom! Download your free white paper here!

 



4 Company-Wide Benefits of Optimizing Inventory Operations