Tough Problems Solved

Business owners know all too well that unused inventory is money languishing on the shelf. This means that gaining — and maintaining — strict control over inventory levels can help trim operating costs, loosen cash flow and improve customer service. Many major companies already boast sophisticated inventory control systems to help align their supply chain and business strategies. But with ever-increasing competitive pressures, they’re looking for new ways to hone their methods even further.

One place they are looking is existing enterprise resource planning (ERP) and material requirements planning (MRP) systems, which often aren’t delivering the desired results. Some systems deliver too-complex performance reports; some lack a strict discipline in maintaining a target-setting process; some run into difficulty when gathering and manipulating data; others wobble on safety stock calculations; still others focus too much on shortfalls and not enough on surpluses.

Seizing the challenge, a focused team of IBM Global Business Services consultants and IBM researchers has developed a quite simple solution. IBM Inventory Optimization with SAP NetWeaver Business Intelligence is designed to deliver an efficient, repeatable and intelligent process for reducing and managing inventory levels.

The team devised a way to implement IBM-proprietary inventory optimization algorithms within SAP NetWeaver Business Intelligence, and then feed the algorithm output to SAP R3, advanced planning and scheduling (APS) systems or other inventory management systems. This IBM solution uses SAP NetWeaver Business Intelligence’s reporting capabilities to help provide inventory performance management reports on demand.

The solution is noteworthy because rather than starting from scratch, IBM researchers surveyed existing options, found a way around obstacles (for example, SAP NetWeaver Business Intelligence is not designed for writing algorithms, but it is good for query reporting) and coaxed a solution from one of the most common ERP platforms on the market. The ease, practicality and cost-effectiveness of this IBM-developed solution highlights how working with IBM’s researchers can lead to clear, creative and practical solutions to a company’s needs.

The simplicity and broad usability of Inventory Optimization with SAP NetWeaver Business Intelligence allows for seamless integration into existing IT enterprises – helping to save time and money, and helping to yield a faster return on investment. It also means that clients who already have the SAP suite do not need to invest in additional software. And clients who are considering SAP NetWeaver Business Intelligence may more quickly recoup their investment from savings made possible by the IBM optimization strategy.

The solution has been successfully used with SAP NetWeaver Business Intelligence at NIBCO, a worldwide manufacturer of fittings, valves, actuators and support systems. While the company had licensed mySAP software several years prior to the IBM engagement, the century-old firm was not using it for inventory optimization and looked to IBM for a new perspective.

The IBM Inventory Optimization solution with SAP NetWeaver Business Intelligence was designed to place approximately 15,000 NIBCO products online and automate a previously labor-intensive process. What used to take at least eight hours has been transformed into an almost real-time process.

The IBM Inventory Optimization solution can be customized to meet a broad range of industry- and client-specific needs. In fact, in addition to the NIBCO project, it has already been used to design an inventory optimization solution for a major paper manufacturer and an aircraft manufacturer.

For further information on how IBM can help tighten inventory management processes — or to get a fresh, creative perspective on a broad spectrum of other business challenges — contact IBM Research Services today.