Why Inventory Optimization Matters

Inventory optimization is the science of lowering capital investment in inventory, or stocked items, while reaching target service level goals over a large assortment of stock-keeping units (SKUs) while ensuring demand and supply volatility is under control.

For distributors and manufacturers that buy and/or make items to stock, inventory optimization represents the easiest proven path to significant cost savings and increased revenue.


Increase service levels while also decreasing inventory levels

High service levels result in high customer satisfaction, which is an obvious competitive advantage for most companies. High product availability will lead to higher fill rates and will help fuel stronger customer retention and loyalty.

Conversely, high service levels have a direct correlation with too high of inventory levels resulting in excess stock of products that leads to overstocked warehouses and high capital investment tied up in stock. Capital tied up in stock hinders a company’s ability to invest in other areas of the business that might support growth such as sales or marketing. Keeping stocking levels balanced enables better cashflow flexibility for the business.

Decrease inventory levels
up to 30-50%

Increase service levels
up to 99%

Spend up to 60% less time planning and replenishing inventory

Regarding the purchasing of new stock, if a supply chain planner has thousands of items to consider it becomes impossible to manage all aspects of data controlling the stock replenishment.  Inventory optimization simplifies the purchaser and inventory planner’s daily life and lowers capital tied up in inventory. Through optimization of stock levels, companies can save money, increase their level of service and increase customer satisfaction.

Learn more about optimization benefits

Improve cash flow and return on capital employed

Every penny that can be saved by reducing stock levels has a direct impact on the company’s capital employed. The relative size of the inventory and turnover rate affects the amount of capital tied up and thus the cash flow. To release capital tied up in inventory and use the asset more efficiently is also of great importance in regards to the return on capital employed (ROCE). Inventory costs such as financing, taxes, insurance and write offs are all directly affected by the inventory levels.

See how other companies are optimizing inventory

Ergofast Case Study

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GSAB Case Study

Solving the inventory management challenge

Inventory management applications solves the problem of optimizing inventory levels based on the target service level and delivery capacity. Properly sized inventory levels means that companies can maintain or increase their service levels towards their customers while tied up capital is minimized. The result from increasing the product availability is usually more orders being won and higher customer satisfaction.

By calculating the optimal safety stock, reorder points and order quantities based on the required level of service, the inventory levels will decrease alongside with the capital tied up, while assuring the desired target service level is secured. Most companies have the potential to reduce their inventory levels by 30%, some 50%, some even more.

EazyStock’s automated calculations replace manual processes and the time required to run the calculations. EazyStock saves time, reduces the risk of manual errors and your staff will be freed up to perform more value-adding tasks for the business operations.

EazyStock is affordable and easy-to-install providing an ROI in just a few months, solely based on inventory reduction.

Learn about our easy ERP integration

Inventory Data Analysis

We would be happy to help you with an inventory data analysis so you get a clear picture of the cost savings that can be achieved in your business.

Contact EazyStock