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The
opportunity is enormous: to reduce inventory assets and
distribution costs across a multi-stage supply chain, while
providing a more reliable source of supply to downstream
partners and customers.

But the challenges are also great: the sheer number of policy
variables to set; the requirement of remaking these regularly in
the face of constant change; the stochastic nature of supply and
demand; and, the unreliability of simple rules of thumb, and
even typical spreadsheet models to guide optimal policies. As
with golf, the superficial simplicity of inventory control is
entirely deceiving.

Enter technology. Advances in scientific research and computing
power have combined for the first time during the past several
years to facilitate truly massive improvements in supply-chain
performance in multi-stage distribution systems. The bottom line
includes major improvements in customer service, simultaneous
decreases in total supply chain costs, and great strides in
asset utilization.

Inventory optimization is ultimately about how much, and under
what conditions, product should flow to one location from
another. In an established build-to-stock operation, almost
everything depends on these critical decisions. The average
level of assets, the number of orders (hence warehouse activity
levels), the frequency of shortages, the number of open
backorders-all are direct and immediate consequences.

Trade-offs are inescapable. For example, long term, and all else
being equal, larger order quantities require less warehouse
activity, and result in fewer shortages, while consuming more
working capital and running greater risks of obsolescence. In a
multi-echelon operation, inventory at a central warehouse is
also a partial substitute for inventory at downstream
distribution points (and vice-versa); this is an extremely
important, and also technically difficult axis of optimization.

Assiduo dramatically improves companies' power to resolve all of
these trade-offs to best advantage. While traditional
applications have presupposed crude user-determination of
optimal fill-rates-a near fatal weakness for companies in a
multi-echelon environment concerned with total supply chain cost
-our software takes no such short-cuts. Armed with sophisticated
cost models tailored to the environment, the Assiduo system
recommends optimal target fill-rates, and the associated
inventory parameters for every SKU-location pair.

Assiduo also empowers managers to set global inventory strategy
as never before. We believe passionately that single point
solutions are inadequate, and that managers require meaningful
choices and control that go well beyond setting broad-brush
service-level targets or getting stuck in the weeds of
individual items. Our system contain highly innovative features
backed up by cutting edge algorithms that permit you to shape
the performance of your demand chain based on the unique
features of your environment. |
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