Advanced planning and optimization (APO) is designed to achieve optimum consistency and efficiency in business processes. An APO solution includes supply chain planning applications that increase the overall knowledge of different business operations for the planning of inventory and the collaboration with suppliers and customers on a strategic, tactical and operational planning level. Leveraging a holistic APO strategy provides enhanced forecasting, planning and optimization of business processes for maximum visibility across the entire supply chain.
Vendor Managed Inventory
Simply put, vendor managed inventory (VMI) allows suppliers to manage and optimize their customers’ Inventory levels to better align them to consumer demand. Using historical data and electronic communication, VMI is a lean supply chain solution that provides inventory and sales data based on actual customer consumption in order to manage product ranges and be responsible for balancing inventories and replenishment. A VMI solution synchronizes with supply chains and balances inventory so companies don’t have to worry about out-of-stocks or overstocking slow-moving items.
The primary goal of VMI is to decrease costs and increase visibility and efficiency. A VMI solution gives full product visibility at the points of sale, with detailed inventory and consumption data. This insight allows for the optimization of production as well as order processing and logistics. The growth and success of commercial products and brands relies heavily upon the full and consistent availability of products at the consumer level. Increasing efficiency ultimately leads to consumer brand loyalty with the availability of quality brands at quality customer service. As a result, out-of-stocks are reduced and more customers are satisfied.
Sales and Operations Planning
Sales and operations planning (S&OP) reduces the complexity of planning processes with multiple sources of information to improve business strategies and results throughout the organization. Based on demand-driven sales and operations planning, S&OP provides organizations with integrated business management tools and processes that will help them overcome historical issues and create an opportunity for true collaborative planning by synchronizing all functions of the organization. This insight allows companies to obtain balanced inventories with high turns, which maximizes efficiency and profitability.
Integrating a S&OP solution that enables broad-based collaboration allows companies to make accurate long- and short-term sales and operations planning decisions that are informed by insights gathered from departments across the company, such as sales, marketing, finance and demand planning. The ability to forecast demand with high levels of accuracy and precision helps companies reduce errors and costs, spend more time collaborating to deliver results and make intelligent decisions to reduce lead times across the entire supply chain.
Distribution Requirements Planning (DRP)
Distribution requirements planning (DRP) manages demand in a complex distribution environment, which allows retailers to reduce out-of-stocks and overstocks at the same time with higher inventory turns. DRP is a solution for retailers, manufacturers and wholesalers, which takes into account real, daily consumption, inventory and event management to synchronize supply chains and balance inventory levels. It focuses on the internal distribution process at distribution centers (DC’s) or points of sales (POS) to allow manufacturers and retailers to automatically adjust replenishment rates according to real demand. Moving away from the “one-size fits all” approach to distribution planning and accounting for each unique demand environment and business rules will increases sales and brand loyalty with the assurance of product availability at all times. This in turn, maximizes profitability, competitiveness and market share.
In order to have complete end-to-end supply chain visibility, suppliers need clearer insights and quicker access to their customer’s data. By implementing an APO solution, suppliers have increased knowledge of business operations, historical data and buying patterns, which helps them improve on-shelf-availability, while preventing out-of-stocks and overstocks.