How much are your legacy applications costing you?

2 min read

Tags: Blog, Demand forecasting, Purchasing & replenishment, Technology

Daniel Fritsch   May 29 2015


working capital costs in inventory management, legacy applications

Index

  1. Unify your sales and supplier planning in your legacy applications

Legacy applications and inventory planning solutions of the past were originally designed for far less complex and more centralized businesses. With the global economy’s rapid expansion and the flattening of supply chains, traditional technologies cannot keep pace with the ever changing technology landscape.

These legacy systems can’t support today’s requirements for global collaboration, advanced supplier management and rapid shifts in customer demand. The slightest shifts in demand volatility can wreak havoc on a company’s bottom line.

Let’s take a look at 4 major limitations of legacy systems in the supply chain industry:

1 – Forecasting Inaccuracy: Ever increasing volatility in demand continue to widen the gap between inventory managers and the inventory they keep. The delicate balance of minimizing stock outs versus carrying too much inventory are a daily challenge.

2 – Limited Simulation Capabilities: Limited ability to calculate or similate stock/no stock decisions and their associated effects on service levels and inventory costs.

3 – Siloed Operations: Limited collaboration and visibility across multiple stock locations or different planning systems result in inflated operational costs.

4 – Working Capital Restrictions: Inefficiencies in demand planning and procurement processes result in large quantities of excess and obsolete stock on hand tying up working capital that could be invested back into the business.

 

Unify your sales and supplier planning in your legacy applications

A large percentage of wholesales distributors manage separate demand plans and supply plans in isolated or stand alone systems. These systems do not speak to each other in real-time, which drastically raises the variability of the supply chain. However, with the introduction of Cloud solutions for inventory optimization, most outdated legacy systems now have a fighting chance.

System integrations are now available to extend advanced demand forecasting, inventory planning and replenishment capabilities that were not previously available. Most companies discover they can actually avoid a costly or expensive system replacement by simply adding on optimization to their current architecture.

Ideally, all plans should be developed in one centralized system that reaches out across your network of warehouses, stock locations and distribution sites. Many wholesales distributors lean on Excel, ERP systems or older legacy planning tools to calculate demand and supplier metrics. Even robust ERP’s are limited to accepting, processing, shipping and accounting for customer orders and sales. For most Chief Financial Officers and Operations Managers, that is not enough to run and manage a profitable or predictable supply chain.

The real question is how much is your current legacy system costing you? Do you struggle with having too much working capital being consumed by your operations? Are you holding costs for inventory crippling your business? Maybe it is time for a change. Maybe it is time for an inventory optimization solution to support your legacy applications.

 

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4 Company-Wide Benefits of Optimizing Inventory Operations