How to Approach Inventory Strategy Decisions

In this article we will give you recommendations on how to use SC Navigator and Inventory Planning together to achieve better results and save modeling time.

Workflow on Inventory Strategy Decisions

  1. If possible, align product groupings in SC Navigator with what is going to drive stocking decisions (e.g. include ABC XYZ in product grouping in your SC Navigator aggregation.

  2. Run SC Navigator scenarios covering the range of possibilities you are considering. This might be scenarios with different numbers of DCs, or scenarios with central versus regional stocking logic, for example. The scenarios tell you:

    • Which location each product should be stocked in, if not all of them;

    • The flows through each DC;

    • The transport costs for each product in each situation/scenario.

  3. Transfer all scenarios into Inventory app as datasets (How to Transfer SC Navigator Output to Inventory App)

  4. Calculate safety stock per SKU for each scenario.

    • Optionally, create sub-scenarios with different service levels, if this is relevant.

  5. Add up transport costs + inventory costs for each scenario and sub scenario.

  6. Decide best stocking decision & service level per SKU or per product grouping:

    • Per SKU gives more flexibility;

    • Per product grouping is easier to model and may be easier for businesses to implement.

  7. Aggregate the recommended stock to put back in SC Navigator:

    • Aggregate inventory levels by product grouping;

    • If stocking decisions align with product groupings, force flows via the Warehouse Product tab;

    • If stocking decisions are per SKU then it may be necessary to aggregate and force flows using transport constraints or ratio constraints.

  8. Run the SC Navigator scenario with final stocking decisions to get warehouse sizes and final costs.