How to Improve Inventory Metrics by 20%
With the US implementing trade tariffs yesterday, there has never been a greater focus on inventory costs. Aera Technology has published some data about how its Inventory Management capabilities are assisting customers.
Optimising inventory management can make the difference between success and failure. Holding excess inventory can introduce needless costs into the business. Excess inventory costs include storage, insurance, labor, handling, taxes, obsolescence, as well as the opportunity cost of tied-up capital. Therefore, optimising inventory management and forecasting can make a huge difference.
Research by Deloitte found that “The typical inventory carrying costs are found to be within the 7%–16% range, inclusive of the weighted average cost of capital.” Aera estimates in its prospect put it much higher at 20-30%. In one case study, Deloitte achieved savings through improving processes, volume consolidation and reducing the total inventory. The Aera decision Intelligence solution has driven down costs and delivered several key benefits to customers. It has achieved:
- 20% service level improvement
- 23% reduction in Safety Stock Inventory
- 23% reduction in Material cost write-offs
In large organisations, this will be significant. JD Irvine, a multi-billion dollar Paper and Forest Product Manufacturing conglomerate, is leveraging the platform and has seen several benefits.
Georges Tetegan, Corporate Vice President, Business Transformation at J.D. Irving, said, “Even with the best planning, you can have changes in manufacturing, warehousing capacity, or customer order patterns that require continually rebalancing inventory. This demands time and constant attention.
“Using Aera and its decision intelligence capabilities, we can predict issues ahead of time and receive informed recommendations in real time to optimize inventory management and provide critical oxygen to our teams on the front lines. This enables us to accelerate our business into the future.”
How does Aera improve Inventory Management?
Bold claims, but Aera has focused on this sector since it began, building specific AI models to assist major global enterprises in improving inventory and their supply chain orchestration. Those companies have optimised decisions to increase working capital, improve service, and reduce waste.
The challenge for supply chain managers is that, in recent years, supply chains have become even more complex, with global disruption merely exacerbating the challenge.
Well-deployed AI can assist people in making the right decisions far faster than the spreadsheets that many companies still use which often rely on a stable business environment. Costs such as raw materials, components, transportation, labour costs and now tariffs make decision making complex.
Through the use of Aera skills complementing each other, the Aera Decision Cloud is able to sense changes in supply chain operational data and suggest and automate decisions to mitigate any demand and supply fluctuations. Benefits include:
- Reduction of product waste and spoilage
- Prevent markdowns
- Reduce excess inventory
- Prevent stockouts levels
- Enhance service levels
- Lower carrying costs
- Improve network efficiency
- Improves sustainability
- Optimise production efficiency
Aera Skills
Aera has created many skills across its platform. Those that relate to transforming inventory performance include:
- Dynamic Inventory Management: Analyzes historical and real-time demand patterns to determine optimal stock levels. Identifies inventory surplus or shortages and provides actionable rebalancing strategies. Automates stock reallocation to high-demand areas, ensuring optimal service levels. Continuously refines inventory forecasts and rebalancing algorithms by learning from outcomes.
- Stock rebalancing: Detects overstocked and understocked locations using network-wide visibility. Proposes optimal transfers to balance inventory across the network. Automates stock transfers, ensuring critical products are available where needed most. Improves rebalancing accuracy by analyzing post-transfer outcomes.
- Production Scheduling: Identifies inventory at risk of obsolescence based on age and demand trends. Suggests prioritization of ageing stock in production schedules. Adjusts production plans to utilize ageing materials, reducing waste and associated costs. Continuously refines scheduling logic.
- Prevent Stockouts: Monitors demand signals and supply constraints to identify stockout risks. Provides optimal procurement or transfer solutions to prevent interruptions. Executes replenishment actions, ensuring stock availability. It continuously learns from outcomes to anticipate future risks and enhance service reliability.
- Control Tower Skill: Detects anomalies and root causes of supply chain disruptions using historical and real-time data. Provides actionable insights to resolve issues proactively. It Automates corrective actions to mitigate disruptions and prevent recurrence and continuously refines prediction models.
- Demand Forecasting Skill: Uses historical and external data to create accurate forecasts, ensuring stock aligns with anticipated demand
- Demand Sensing Skill: Incorporates real-time signals like point-of-sale and weather trends to refine forecasts and adapt to sudden demand shifts
- Dynamic Safety Stock Skill: Continuously recalibrates safety stock levels based on real-time demand variability and supply chain conditions
- Inventory Rebalancing Skill: Adjusts stock distribution dynamically across locations to prevent both overstocking and stockouts
- Ageing Inventory Management Skill: Identifies at-risk inventory and redistributes it to reduce spoilage and financial write-offs.
- Finance: Automate financial planning and forecasting to drive efficiency, accuracy, and strategic decision-making.
Fred Laluyaux, CEO of Aera Technology, stated, “Inventory optimization is just one critical area where Aera is helping companies improve supply chain performance.
“From the start, we designed Aera as an always-on decision intelligence agent to continually accelerate and optimize enterprise decision-making at scale and unlock new value. Today, decision intelligence is a must-have, and Aera is at the forefront — fueling amazing innovation and measurable outcomes for progressive leaders.”
Enterprise Times: What does this mean
With disruption to supply chains looking to continue for some time, Aera has published these benefits at the right time. Organisations are faced with increasing complexity and rapidly changing tariff regimes, which will be hard to forecast and even more difficult to predict the likely financial implications.
Organisations are now able to leverage AI and Machine Learning capabilities to improve their supply chain orchestration. Relying on Spreadsheets and legacy tools could lead to financial disaster.
Aera can be used to automate decisions. It can also offer advice about the next best action, which many organisations do. It keeps the human in the loop and ensures that factors outside the AI’s knowledge can be checked. What will be interesting to see is how many organisations turn to Aera in this age of supply chain disruption.