Inventory Optimization Top Priority for Supply Chain Organizations

June 10, 2009
Growth in global IO application spending will increase 10% per year says IDC Manufacturing Insights.

Inventory optimization (IO) is now among the top three priorities for many supply chain organizations as they seek to create increased efficiencies during the continued global recession, according to a new report from IDC Manufacturing Insights.

Over the next five years, IDC expects to see an increased focus on supply chain modernization, network "rightsizing," and asset optimization. The company estimates healthy growth in global IO application spending in the 10% per year range. This is ahead of the spending range for most supply chain management application categories.

"Dramatic changes in business are having an inevitable impact on a company's supply chain network," said Simon Ellis, IDC Manufacturing Insights Practice Director, Supply Chain. "Increasing the productivity of assets has taken on more importance because of its direct relationship toward maximizing working capital and improving the bottom line."

IO applications are designed to plan inventory policy across multiple dependent echelons of a supply chain, in multiple planning periods. They set inventory targets up and down the supply chain on a simultaneous basis. These applications can also provide the ability to create what-if quantification of the impact of certain business decisions on overall inventory management.

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