Optimizing More than Inventory
How RSI is Helping a Highly Successful Healthcare Distributor Optimize Service, Inventory, and their Distribution Footprint
David Mintz became familiar with Right Sized Inventory (RSI) when he was searching for an inventory optimization tool that could not only effectively handle several thousand SKUs, but also could provide accurate recommendations in the face of non-normal demand patterns. RSI’s patented, predictive analytics solution can not only handle large numbers of items, but also selects the appropriate statistics for a given demand set. RSI also incorporates all the required supply chain factors required to determine optimal inventory levels. This aspect of our technology is crucial in producing inventory policies that stand up to the test of real-world conditions. RSI’s offering hit the mark for David and he later introduced RSI into NDC when he joined the company as its Chief Supply Chain Officer.
NDC is a unique healthcare supply chain company that offers a wide range of solutions for providers, distributors, and manufacturers with the goal of delivering efficiency to healthcare. They manage tens of thousands of SKUs, across multiple U.S. distribution centers. Highly effective inventory management is paramount to the success of NDC and their customers. For a company like NDC, it is important to accurately manage SKU-level inventory targets at each distribution center where the product is stocked. RSI’s patented predictive analytics solution simulates the real-world environment to optimize inventory at the individual product and location level.
RSI is also designed to work well with the DDMRP methodology of replenishment and materials planning. Both RSI and DDMRP share a demand-driven approach to inventory management. They prioritize understanding and responding to actual demand patterns in the supply chain, rather than relying on forecasts or assumptions. This allows for more accurate and effective inventory planning and replenishment based on actual demand signals. This is important to NDC given the high degree of demand variability and forecast uncertainty they face, particularly in a post-pandemic environment.
Multiple aspects of RSI’s offering have been helpful to David and his supply chain organization, including:
Sound Inventory Targets
The science used in RSI’s inventory optimization analytics is unique and produces results that NDC trusts. RSI recognizes that demand and supply variability can change over time, and inventory levels need to be adjusted accordingly. RSI focuses on right-sizing inventory levels based on actual demand and supply variability. NDC has been able to achieve both inventory reductions and increased customer service levels with the support of RSI.
Reliable Results through an Easy-to-Use Interface
RSI is easy to use and allows for efficient adoption by analysts. The absence of barriers in using RSI makes it easier for NDC to achieve repeatable business results. RSI’s straightforward data structure has enabled efficiencies that have reduced the time required to prepare and load data from NDC sources.
Expert Team Willing and Help to Help Solve Problems
RSI’s team of expert supply chain analysts help NDC with problem solving, scenario planning, and analytics support. The RSI team provides a great working experience through our Inventory Optimization as a Service (IOaaS). The knowledgeable people at RSI consistently bring recommendations to clients… not just data.
Scenario planning is important because it helps to identify potential risks and opportunities and develop strategies to address them. The supply chain is subject to many external factors such as natural disasters, geopolitical events, and global economic conditions that can impact the availability of goods and services. Modern enterprises need to plan for these sources of variability to mitigate risk and ensure continuity of supply at reasonable cost levels. The following two examples illustrate RSI’s scenario planning capability in support of NDC’s business imperatives.
Optimization of distribution footprint. The combination of RSI technology and IOaaS was used to model item demand scenarios at multiple DC's to help answer how many sites were needed, at what size, and in which locations. This analytics work helped to influence decisions around size and location of DC's by providing clear implications to inventory costs and customer service levels.
Explore potential service level adjustments. NDC had long-standing customer service levels for many of their line items. RSI was able to help the supply chain team quantify the value of modifying service levels based on an ABC categorization of the company’s line items. This analytics support helped to optimize service levels for many items while identifying clear implications for inventory and space cost consequences.
Many distributors experience seasonal demand fluctuations, which can impact inventory planning and management. Managing inventory levels during peak seasons, avoiding stockouts, and minimizing excess inventory during off-peak seasons can be challenging. In addition, limited warehouse space or inefficient warehouse layout can present challenges for distributors. Proper space utilization and product placement are critical to optimize inventory management and order fulfillment. RSI is ideally suited to help companies, including distributors, tackle these types of challenges through our advanced analytics and expert supply chain team. Our unique technology and team of supply chain experts are ready to help you tackle your inventory and distribution footprint challenges today!