Around 40 years ago, a groundbreaking approach to inventory management changed the way companies would plan and manage their inventory forever, with companies streamlining their distribution operations and making them highly efficient. Many of the systems used today are becoming outdated though, as technology has since moved on. This blog takes a quick look at the inventory management success story so far and why it’s set to have an even brighter future.
Inventory planning guru of the 1980s and 1990s
Back in the 1980s, Gordon Graham revolutionized distribution and inventory management. He became known as the guru of inventory planning throughout the 1980s and 1990s, and his ideas about seasonal and historical usage, vendor lead times, carrying and replenishment costs, as well as economical order quantity were widely accepted and incorporated by numerous vendors into their inventory management software. Companies from all kinds of industries have benefited over decades from the “Gordon Graham approach” enabling them to efficiently management inventory levels, while maximizing productivity and profitability.
The power of tech
Still today, many MRP forecasting and inventory planning systems are based on Graham’s traditional formulas. However, since the turn of the millennium, and in particular over the last decade or so, we have seen massive evolution of the technological landscape. For companies to remain competitive in light of the disrupted supply chains and extended lead times that are now commonplace, their inventory management systems also need to evolve. Platforms like SAP Business One have harnessed powerful automation, analytics, AI, IoT, and cloud technologies, among others, to deliver greater insights and support decision-making based on real-time information. With data and business intelligence tools integrated into SAP Business One to run key inventory processes, companies can further optimize their inventory management.
Enhanced inventory planning and organization for wholesale companies
Solution architects from ECS have replaced these outdated formulas with an easy-to-manage system delivering real-time insights into inventory data. The result is a series of procECS modules that integrate fully with SAP Business One to deliver additional functionality and support a number of areas including inventory management. Through these extra functions, wholesale companies are not only able to optimize how much they invest in their inventory, they can also reduce the number of POs, inventory receipts, AP invoices, and AP payments. With the right inventory levels in place, a company’s entire procECS can be optimized. The Inventory Planning System procECS module offers a new approach to planning and organizing inventory and suggesting purchase orders, while reducing inventory levels and preventing stock-out situations. What’s more, by integrating with the tools already embedded in SAP Business One, companies can significantly improve their forecasting capability.
Without a shadow of a doubt, the approach developed by Gordon Graham all those years ago paved the way for inventory planning over the next few decades. But with technology evolving at such a fast pace, companies have an opportunity to take their inventory management systems to the next level so they can deal with supply chain challenges, optimize stock, and improve forecasting – while maximizing productivity and profitability at the same time. Read more here about the full series of procECS modules that integrate seamlessly with SAP Business One.
