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TECHNOLOGY VALUE MATRIX

2016 - INVENTORY

OPTIMIZATION

A N A L Y S T

James Cooke

T H E B O T T O M L I N E

Nucleus evaluated the usability and functionality of the most

influential inventory optimization (IO) solutions in the market.

The market for IO solutions continues to change as vendors add more

prescriptive analytics for specific inventory attributes and work on improving

usability with the addition of visualization, dashboards and notifications for

supply chain planners to quickly spot and fix inventory problems. The leading

vendors offer a high return on investment (ROI) by providing sophisticated

solutions to streamline inventory across the entire supply chain while

maintaining the correct amounts of stock to drive sales.

M A R K E T O V E R V I E W

More so than almost any other supply chain application, IO solutions can have a

huge impact on a company’s finances. By minimizing inventory, this software frees

up working capital for the business and, by guaranteeing that the company has the

right stock on hand, it ensures availability of products, parts or materials to provide

steady sales for the enterprise. Historically, these tools provide the highest time to

value for companies with complex or global supply chains with large stock holdings

and numerous stocking locations. In its research Nucleus found that companies

applying IO tools can generally reduce inventory holdings in the range of 10 to 30

percent.

Although most supply chain professionals might not recognize it as such, IO

software is really a form of prescriptive analytics. That’s because these applications

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recommend where and how much stock should be held to meet a designated service

level and to comply with specific inventory policies. The software itself relies on

sophisticated algorithms and complex modeling to make their stocking

determinations. Today multi-echelon (MEIO) functionality is standard fare in market

leading solutions so that the software can adjust stock holdings holistically taking

into considerations all sites across a network. Although robust solutions should

automate the stocking and replenishment process to a large degree, they should

also provide for scenario analysis so planners can weigh tradeoffs in costs and

service when making a critical decision that can impact a company’s finances.

Advanced functionality includes the use of machine intelligence to identify stocking

patterns for seasonal products or new product introductions, which obviously would

have no past sales history for an inventory benchmark. As more companies adopt

demand-driven supply chains, leading solutions can take demand signal input to

adjust inventory in near real-time.

Going forward, Nucleus expects that top vendors will start paying more attention to

usability. (Nucleus Research p217, 3 steps for IO vendors to boost midmarket sales,

December 2015.) Because IO tools use complex algorithms and mathematical

models, they often require extensive training for users to gain the benefits. If IO

vendors want to expand their market, they are going to have make their tools easier

to wield on the job. One reason is that small and medium-size companies don’t have

the staff resources to dedicate specific users to an IO tool as large companies do,

and, unless software makers simplify tool management, IO vendors won’t expand

their customer base beyond huge corporations. In addition, even supply chain

planners at large companies are pressed for time and need the ability to grasp

meaning at a glance and take corrective action.

Making IO software easier to use will require vendors to provide more in the way of

visualization, dashboards and notifications. Although leading vendors are going

down this path, many rely on third-party analytics applications, such as Tableau or

QlikView, to highlight critical information visually. Nucleus believes that vendors are

going to have to offer more embedded visualization in the applications to gain

broader adoption.

The market has also seen the emergence of cloud-based solutions targeted to

budget-conscious companies in specific industries or with specific requirements like

intermittent demand. These IO vendors provide an application with core

functionality but lack the extensive sophistication found in the market leaders.

These cloud solutions could expand the market because their offerings are more

affordable for medium-sized companies.




L E A D E R S

Leaders in the 2016 edition of this Matrix include Tools Group, GAINSystems, JDA,

Logility, Manhattan Associates and Terra Technology.

TOOLSGROUP ToolsGroup based in Boston remains the market leader in MEIO software because of

its continued investment in enhancing the functionality and usability of its solution.

Its IO tool is part of the ToolsGroup Service Optimizer 99+ (SO99+) platform, which

also has solutions for demand forecasting, demand collaboration, demand sensing,

production planning and trade promotion optimization. ToolsGroup can deploy its

IO application via the cloud or on premise and can link it to a variety of platforms

including SAP, JDA and Oracle.

The IO tool uses statistical demand and inventory models to assign different service

targets to each individual stock keeping unit (SKU) by location. It also provides for

stock mix optimization, the ability to set individual target levels in a category while

maintaining a group target. It also does line fill rate to support supply chain

I O VA L U E MAT R I X 20 1 6

F A C I L I T A T O R

C O R E P R O V I D E R E X P E R T

L E A D E R

Us

ab

ilit

y

F u n c t i o n a l i t y

JDA

SAP IBP

LLamasoft

Infor

SAS

ToolsGroup

GAINSystems

Cast Flow

Slimstock4R Systems

Vanguard

Manhattan

Terra Technology

Logility

IFPA

SAP EIS

Blue Ridge

One Network

Kinaxis

Oracle

Smart Software




operations striving to meet the metric of the perfect order. (Nucleus Research p50 -

Anatomy of a Decision - 3 reasons for selecting ToolsGroup, March 2015) ToolsGroup

has been far ahead of other vendors in using machine learning to calculate inventory

for items with high demand variability and seasonality.

Last year ToolsGroup continued to enhance its offering. It added a supply chain

simulation tool, dubbed “Instant Replay” that allows supply chain planners to review

historical events and compare multiple scenarios for each day by customer, SKU and

location. (Nucleus Research p78 - Tools Group debuts Instant Replay, May 2015) It

released a special algorithm to take into account the market value for life-cycle

products in determining inventory holdings. (Nucleus Research p124 - ToolsGroup

unveils algorithms for non-standard obsolescence, July 2015.)

In the area of usability, ToolsGroup last year enabled the use of third-party data

visualization tools into its dashboard home page. Although ToolsGroup offers its

own report builder and provides visualization for core analytics and model building,

it does rely on third-party tools, like Tableau and QlikView, for advanced

visualization techniques.

Finally, last year ToolsGroup positioned its solution to compete for omnichannel

commerce when it inked a partnership with Retail Velocity for a demand signal

depository - a database that stores and harmonizes store demand information from

multiple parties. As more retailers and manufacturers adopt demand-driven supply

chains, they will require upstream information in near real-time to determine stock

holdings. Access to a demand-signal repository positions ToolsGroup to provide

inventory optimization for demand-driven supply chains in the retail sector.

TERRA TECHNOLOGY Terra Technology, based in Norwalk, Conn., describes its tool as MIO (multi-

enterprise inventory optimization) rather than MEIO as the application does

inventory optimization for store locations as well for plant and distribution sites.

Whether installed in-house or off-premise in the cloud, the tool uses stochastic

technology to determine optimal stocking levels for SKUs by location. Its customers

often use demand signals such as point-of-sale data to drive replenishment.

Improvements to functionality this past year include enhanced flexibility to solve for

alternative objectives across all echelons, and the ability to recommend statistical

maximum inventory recommendations for perishable products. Enhancements to

usability include additional flexibility to customize reports via selectable fields. The

tool leverages QlikView as an embedded visualization and reporting tool to

aggregate, analyze and display results.




Terra Technology stands out because of its ability to address forecast error. In fact,

the ability to calculate forecast error over lead time brings about more accurate

safety stock recommendations. Nucleus’s own assessment of Terra Technology IO

deployment found that the tool delivered significant value in right-sizing inventory

to free up working capital. (Nucleus Research p163 - Terra Technology Anonymous

Manufacturer, September 2015) Going forward, Nucleus expects Terra IO tool to be

sought out for inventory optimization by companies running demand-driven supply

chains.

LOGILITY “Voyager Inventory Optimization” from Atlanta-based Logility provides a MEIO tool

for both tactical and strategic optimizations. Companion solutions in the Voyager

suite include demand optimization, supply optimization, transportation

optimization, retail optimization and integrated business planning. The software is

available as both an on-premise or a cloud solution

Voyager IO has a high degree of functionality for users to optimize inventory mix

and positioning along designated service levels. The tool can segment inventory by

such parameters as region, product group or demand variability and supplier

reliability. Unlike many competitors, Logility shares the math behind the inventory

optimization algorithms, thus allowing supply chain planners to build confidence in

the calculations.

A hallmark of the solution is its usability. The tool was designed to accommodate a

range of users from basic operators who want automatic calculations to advanced

planners who want to drill down to examine specifics in the calculations. It comes

with dashboard visualizations with drill-down capability. Unlike other competitors,

which rely on outside parties for visualization, the data displays are native to

Logility.

Another distinguishing feature that sets Voyager apart from competitors is its

advanced analytics. Users can use the solution for strategic what-if assessments to

determine their inventory options. Because of its sophisticated analytics and high

degree of user friendliness Logility earned its high spot in the matrix.

GAINSYSTEMS The MEIO solution from Chicago-based GAINSystems uses proprietary algorithms

to evaluate supply and demand variability to set inventory stock levels. GAINS

(which stands for General Adaptive Inventory Solution) creates a series of inventory

and replenishment plans that take into account targeted customer service levels as

well as maximum contribution to a company’s profit margin. The software uses both




sales orders and point-of-sale data to refresh service-level stocking by item and

location.

In conjunction with its IO, GAINSystems also provide complementary tools for

demand planning and forecasting, sales, inventory and operations planning

(SI&OP), and replenishment optimization. Those applications are used primarily by

businesses in distribution, maintenance and repair, and manufacturers that have

multi-echelon bills of material. The software is delivered both as an on-site and a

cloud solution

This past year GAINSystems took steps to upgrade both the functionality and

usability of its tool. It improved its in-memory processing performance to allow

more time-phased value as well as iterations to move toward more optimal results

with its artificial intelligence algorithms. As for usability, it has put in a new mobile

user interface based on HTML5 and expanded the use of data visualization with

“treemaps” for highlighting critical information.

One distinctive feature of GAINS is its ability to weight the disservice costs such as

lost sales, expedited shipments or production downtime versus the inventory

carrying costs for holding more buffer stock. Nucleus also found that GAINS solution

can generate substantial ROI by improving fill rates as well as reducing inventory.

Although Nucleus assessed applications on functionality and usability for this report,

it should be noted that GAINSystems’ customers often cite the vendor’s customer

service as the key consideration in selecting this vendor over others.

JDA The inventory optimization solution from JDA Software, based in Scottsdale, Ariz.,

can establish discrete inventory policies and stocking strategies. In the past year,

three top retailers in North America have deployed this solution because of its ability

to handle enormous SKU volumes in setting safety stock. It’s available for both

cloud and on-promise deployment.

The current version of this MEIO software - 8.2 - uses stochastic parameters to

define stocking targets. Standout functionality in this solution includes its ability for

the user to segment inventory, establishing different safety stock levels based on

varying attributes. Another distinguishing feature is the ability for replenishment

interval optimization, which recommends when items need to be reordered to

maintain stocking levels.

The user interface screen displays such criteria as inventory parameters for each

item by location and time, inventory investment, holding costs, order costs, and

expected service levels. The solution provides drill-down views for planners to gain a




deeper understanding of the factors influencing inventory levels and demand. It

offers a combination of homegrown and business intelligence reports. Tool

operators can also use Cognos to create their own custom data visualizations.

JDA continues to invest in its product with plans to further develop more algorithms

as well as upgrade the user interface. The ability of the JDA IO solution to scale, as

shown by its selection by top retailers for the task of inventory optimizations,

dictated its inclusion in the leader quadrant.

MANHATTAN ASSOCIATES Atlanta-based Manhattan Associates offers IO software that’s widely used in

pharmaceuticals, wholesale food distribution and retailing. Version 2015 of MEIO

uses a statistical demand forecasting engine to determine replenishment at the SKU

location level. The IO tool is one of the core applications in its platform. The solution

can be deployed on premise or hosted in the cloud.

One feature of the Manhattan’s solution is its Unified Forecasting Method (UFM), a

proprietary algorithm developed by blending key aspects of several advanced

forecasting models. The UFM dynamically self-adjusts based on the demand

characteristics it detects. The IO solution also provides special functionality for

setting optimal safety stock for slow-moving items based on their cost and value

proposition to the enterprise. Another popular feature is its “inventory layering”

reporting tool, which breaks down on-hand inventory into categories such as

presentation stock, cycle stock, safety stock along with forward buys, overstock,

and replenishment overrides.

In terms of usability, the Manhattan solution provides a start page (called Daily

Agenda) for supply chain planners that shows daily exceptions and displays key

metrics, keeping the user focused on the critical tasks at hand. Although Manhattan

has developed some of its own standard visualization, it also leverages Cognos for

additional drill down views and business intelligence reporting.

Because of Manhattan’s focus on omnichannel solutions, the vendor plans to add

some features of special interest to retailers in its 2016 IO revision, slated for debut

later this year. These features are targeted at managing the constant, overlapping

promotional events that have become the norm in retail.

E X P E R T S

Experts in the 2016 edition of this Matrix include Blue Ridge, Kinaxis, SAP EIS, SAP

IBP, Slimstock and Inventory and Product Flow Analyst (IFPA), now owned by

LLamasoft.




KINAXIS Based in Kanata, Ontario, Kinaxis Inc. offers inventory optimization as one of the 13

applications in its RapidResponse platform for supply chain planning.

RapidResponse is software-as-service (SaaS) cloud platform that provides a

harmonized view of the stock holdings for an extended enterprise. RapidResponse

facilitates the integration of multiple data sources in near real time such that

manufacturers can see on hand inventory being held by suppliers.

In the past year, Kinaxis has added the ability to model non-normal distributions for

demand as well as lead-time variability in its IO tool. As for usability, it has added

more workbooks, which are sets of editable views into data used to perform a set of

tasks or carry out a process. The new workbooks allow for supply chain planners to

better understand the driving factors influencing inventory and assess the impact of

inventory levels on rightsizing stock holdings. It should be noted that

RapidResponse provides what-if analysis tools that can generate scenarios in near

real-time.

Although the IO solution can run as a stand-alone application, most Kinaxis

customers use the tool in concert with the others for supply chain planning. That

approach allows planners to apply a four-stage process to inventory optimization:

segmentation to identify causes of inventory fluctuations; optimization to evaluate

the cost versus service trade-offs, stock deployment in conformance with policies,

and inventory management with frequent adjustments.

Nucleus found that Kinaxis’s approach is well-suited to discrete or make-to-order

manufacturers. Because those manufacturers rely on dozens of outside suppliers or

have outsourced production, they use the Kinaxis tool as much for sourcing as for

setting inventory.

SAP SAP SE, based in Walldorf, Germany, offers two MEIO tools: SAP EIS, which stands

for Enterprise Inventory and Service Level Optimization, and SAP Integrated

Business Planning (IBP). SAP’s 2013 acquisition of SmartOPs provides the basis for

SAP EIS, and SAP is also incorporating some of the feature functionality of

SmartOps into the SAP IBP tool as well. SAP EIS is only available for on-premise

deployment while SAP IBP is a cloud tool.

SAP EIS uses a probabilistic process engine to set holistic stock levels for finished

products, work in progress and raw materials across the supply chain. The solution is

designed to set maximize inventory efficiency based on the customer service levels.

Although the SmartOps solution was originally sold on a piecemeal basis with




functional modules for demand and inventory optimization sold separately, today

SAP sells all modules in the license package.

The other tool, SAP IBP, sets inventory by location and SKU as well. It’s part of SAP

IBP platform, which also includes applications for demand, sales and operations

planning, supply and response, and a control tower. It’s designed to work with SAP’s

in-memory database, the HANA platform.

Although SmartOPs was a leader in functionality five years ago, SAP EIS has

languished of late, with few improvements to its core engine. In fact, users have

complained about the tool’s lack of friendliness. (Nucleus Research p187 - Usability

bedevils SAP EIS, October 2015) Although Nucleus expects the cloud-based SAP IBP

to become competitive as the German vendor continues development of its IBP

platform, for now, neither tool stacks up against competitors in terms of usability

and leading-edge functionality.

BLUE RIDGE Blue Ridge, headquartered in Atlanta, offers a cloud-based, SaaS MEIO application

to synchronize demand and supply across every echelon and location of the supply

chain while maximizing the profitability of an organization’s inventory investment.

The software maker offers the MEIO tool as a stand-alone application or as part of

its supply chain planning solution. The latter encompasses demand forecasting,

demand planning, aggregate forecasting and planning, supply planning, allocation,

replenishment optimization, S&OP, collaborative planning and supply analytics.

For retailers and distributors, the Blue Ridge MEIO application considers different

demand types in setting inventory. Taking into account demand and supply drivers

up and down the supply chain, the tool ensures product availability in the most

effective way possible.

Due to its cloud, SaaS model, Nucleus found that Blue Ridge has created a niche for

itself among retailers and distributors because it can implement its solution on a

quick timetable, and at a lower than average price point compared to traditional on-

premise deployments.

SLIMSTOCK Based in Deventer, Netherlands, Slimstock offers an on-premise MEIO module in its

application called Slim4. Although the Dutch company has made its software

available on a SaaS basis with third-party hosting, it does have plans in the works to

release a cloud-based version. In addition to inventory optimization, Slim4 also

does forecasting and demand planning. Slimstock makes an offer unheard of in the




marketplace – if a purchaser is unsatisfied it can return the software and get a

refund.

The inventory module in Slim4 determines safety stock and reorder levels. Users

can manage minimum order quantity and desired service level as well as stock types

with the IO module. This past year Slimstock improved its functionality by adding

new inventory optimization modules specifically for retailers. It also upgraded the

user interface as well.

Given its Dutch heritage, the company has a strong presence in Europe and a

growing one in the United States. Although it lacks strong out-of-the-box

visualization tools, its dashboard and management by exception functionality allow

for efficient inventory management.

INVENTORY AND PRODUCT FLOW ANALYST See the LLamasoft profile under the Facilitator’s section for details as the

application is now part of the LLamasoft family.

F A C I L I T A T O R S

Facilitators in this matrix edition include LLamasoft Supply Chain Guru, LLamasoft Cast Flow, One Network Enteprises, Oracle, and Vanguard Systems. LLAMASOFT With its acquisition of Barloworld and IBM LogicTools business last year, LLamasoft,

based in Ann Arbor, Mich., currently offers three separate tools for inventory

optimization. In addition to its flagship Supply Chain Guru, which has MEIO

capabilities, LLamasoft now also has Inventory and Product Flow Analyst (IFPA)

from LogicTools and CAST Flow from Barloworld in its stable.

LLamasoft positions the Supply Chain Guru MEIO tool as both a tactical and

strategic tool for inventory management, and it can be deployed standalone, in the

cloud or on premise. In addition to deciding SKU inventory policies and safety stock

levels, companies use this tool to understand when to pre-build inventory and to

determine amounts for cycle stock, in-transit inventory and work in progress (WIP).

The tool is well-suited to strategic analysis because of its capabilities for simulation.

Over the past year the software vendor has made substantial investments in the

functionality and usability of Supply Chain Guru MEIO. Improvements included

adjustments to the inventory optimization algorithm to detect additional demand

characteristics in order to hit the fill rate target with greater consistency. It has also

added dynamic programming to boost the tools’ problem solving capabilities.




Inventory Analyst, which LLamasoft bought from IBM last year, is still available only

for on-premise deployment. That tool combines mathematical modeling with a

CPLEX optimization engine to adjust inventory levels. One feature of that

application is the analytics offered to help planners determine the underlying cause

for inventory discrepancies. LLamasoft has added the ability for Inventory Analyst to

connect to its Data Guru product, which simplifies the task of pulling information

from other information systems.

CAST Flow (formerly called Cino Inventory Strategy) came with the purchase of

Barloworld. It’s available for both cloud and on-premise implementation. That tool

combines its safety stock optimization techniques with routing and scheduling

optimization. One interesting feature was the software’s drag and drop feature that

allows supply chain planners to quickly build the inventory baseline. As is the case

with Inventory Analyst, CAST Flow can connect to Data Guru to facilitate data

refreshment.

Given its support currently for three IO tools, LLamasoft said it puts forward to a

potential customer the MEIO application that’s most suitable to a company’s

business. The Michigan vendor does plan to eventually combine the applications

into one offering for inventory optimization. Nucleus expects LLamasoft to become

a major competitor in this market once it combines all three solutions into one

product.

ONE NETWORK ENTERPRISES One Network Enterprises, based in Dallas, offers an inventory optimization solution

as part of its Real Time Value Network (RTVN), a platform for trading partners in a

supply chain to share demand signal information. The Intelligent Supply Solution

matches the demand forecast against the inventory held by all trading partners to

enable multi-tier inventory optimization. Because the system monitors demand, it

can detect problems with inadequate stock.

Along with demand signals, the software can factor in lead times, batch size and

order policies in determining inventory targets. By using demand signals for the

input, the system can reduce inventory holdings while improving in-stock availability

to support sales.

This past year in RTVN version 15 One Network upgraded its problem workbenches

to allow users to preview details of a problem such as a projected stockout, and

review the financial value and time window for solving the issue without sacrificing

service levels or sales. The workbench also now presents that necessary information

on a single page, saving the user the time of navigating through various screens. In

fact, an upgrade last year allows any tab to go full screen. One Network also




unveiled its own social apps that allow multiple trading partners to collaborate on

problem solving.

Later this year, in RTVN 16, One Network plans to release a dashboard application

for presenting data and analytics. Although Nucleus finds that One Network offers a

mechanism for managing inventory in near real-time, the solution is really a control

tower rather than application per se. In addition, a company would have to

subscribe to the One Network Enterprises platform, which can limit the applicability.

That said, One Network facilitates inventory oversight for a demand-driven supply

chain.

ORACLE Oracle, based in Redwood, Shores, Calif., furnishes a cloud-based MEIO solution

that’s usually sold in conjunction with other applications from this Enterprise

Resource Planning (ERP) vendor. Oracle Inventory Optimization is part of the

Oracle Value Chain Planning Suite, which includes other tools for demand

management, production scheduling, supply chain planning and network

optimization. As is the case with other value chain applications, the IO tool can feed

information into Oracle’s Advance Planning Command Center, a dashboard for

visualization of key metrics.

The MEIO tool uses stochastic optimization technology to ascertain the correct

placement and amount of safety stock as well as address issues such as risk pooling

and multi-period planning. Manufacturers often use this IO tool to evaluate the use

of postponement strategies. Functionality upgrades this past year include

integration of intermittency information from the demand management application

to allow the IO tool to automatically apply the most appropriate safety stock

algorithm to the stocking situation. It also enhanced functionality to manage

inventory based on parts policy classification and consolidate inventory for servicing

sparse, geographically distributed demand. Finally, the IO tool can now account for

supply variability due to warehousing constraints.

Oracle this year also upgraded the IO user interface as part of the company’s overall

“Alta” initiative to modernize the “look and feel” of its cloud solution, in which the

user often accesses the application through a mobile device. The Alta UI emphasizes

simplicity with more space between visual elements on the screen and data

visualizations for key information.

Given that many supply chain planners complain about deficient user interfaces,

Oracle’s efforts to improve the user experience for IO earns its spot in the matrix as a

facilitator.




VANGUARD Vanguard Software Corp., in Cary, N.C., offers a cloud-based MEIO tool within its

supply planning module. Besides supply planning, Vanguard also furnishes software

for sales forecasting, demand planning, financial forecasting, cash flow forecasting

and sales and operations planning.

The MEIO tool takes into account financial and supply considerations in determining

inventory holdings to enable production leveling, cash flow liberation, and tax

planning. To calculate safety stock, reorder thresholds and purchase order

quantities, the tool uses one of its 27 discrete algorithms that’s most suited to the

business circumstances. The IO tool leverages in-memory technology to perform

what-if scenario analysis, continual adjustment of maximum and minimum

inventory levels for time dependent uncertainty, as well as bills of material

optimization that includes finished goods, work-in-progress stock and raw

materials.

Vanguard IO comes with browser based user interface and provides an extensive

array of data visualizations that the vendor developed in-house. A key usability

feature is the ability for a planner to customize the dashboard to display charts and

tables for his or her business needs. Because Vanguard has focused on providing a

self-explanatory user interface, planners can be trained on the tool in less than a

day.

C O R E P R O V I D E R S

Core providers in the 2016 edition of this Matrix include 4RSystems, Infor, SAS and

Smart Software.

SAS SAS Institute, based in Cary, N.C., provides inventory optimization as one of five

“workbenches” in its Demand-Driven Planning and Optimization (DDPO) software.

Other workbenches are demand signal analytics, forecast analyst, new product

forecasting, and collaborative planning. Although developed as an on-premise

solution, SAS does offer a hosting option.

The inventory optimization workbench calculates inventory levels and order

quantities by SKU, level and location. For decision support, it can develop cost

analysis and provide what-if analysis, allowing a planner to compare multiple

planning scenarios. The tool can also simulate inventory policies for both single-

echelon and multi-echelon networks.




SAS has focused its DDPO software suite on manufacturing, consumer product

goods, and retail. Although the tool offers analytics to assist with supply chain

planning, Nucleus found that the tool lacks the robust functionality found in leading

solutions

INFOR New York-based Infor is working on a cloud version of an IO tool that will be a major

upgrade from its current on-premise application called Inventory Planner. The

existing application can calculate safety and target stock levels for product by

location, taking into account such factors as product expiration date and seasonal

variability.

Inventory Planner allows a company to redistribute inventory to meet specific

service levels. The tool can perform what-if analysis, simulating the impact of lead-

time reductions, service changes or alterations as well as model the expense of

different scenarios. It can assist a company with a segmentation strategy, reserving

the highest levels of service to specific customers.

Nucleus expects Infor to become more of a player in this supply chain software

category once it releases a multi-tenant cloud IO tool, which will be part of the

revitalized supply chain planning suite. The tool will be built on Infor’s Integrated

Business Planning platform and incorporate some of the advanced user interfaces

from its “Hook and Loop” creative lab. Although Infor is piloting the IO cloud

solution with large hospitals, it plans to roll out the solution for use across all

industries.

4R SYSTEMS Store and DC Replenishment Optimized Inventory Services from 4R Systems Inc. in

Berwyn, Pa. is cloud-based SaaS solution for retailers. A key feature of this solution

is that it takes into account profit margins in deciding inventory amounts and

placement. The algorithms calculate inventory levels that maximize profitability

when determining item replenishment. Generally, a retailer sends 4RSystems point-

of-sales data and the cloud solution sends the retailer a plan for ordering inventory

by SKU for each store and distribution center (DC) in its network.

4RSystems recently upgraded its functionality to develop inventory holding and

replenishment plans for short-life cycle product such as seasonal items. The plan

gives the stores an initial allotment of short-life product and then, after a demand

pattern emerges, the tool allocates additional stock to support expected sales. Its

new allocation service provides a web portal for retailers to monitor the progress of

sales for seasonal items.




This solution offers value for specialty retailers concerned about the impact of

margins on inventory holdings. As retailers struggle to stay profitable in an

omnichannel world, Nucleus expects 4R Systems to gain more business from

merchants interested in a low-cost, quick deployment for inventory optimization.

SMART SOFTWARE SmartForecasts is a cloud-based MEIO tool from Smart Software Inc. in Belmont,

Mass. It is designed to determine the optimal stocking balance, taking into account

such factors as inventory cost, service level, fill rate, and inventory turns. Smart

Software sells the tool on a flat fee, perpetual license or a subscription basis. It also

has a companion tool for demand planning.

Smart Software has focused its improvements this past year on offering more in the

way of decision support. By incorporating its forecasting process into inventory

optimization, the application can now more quickly show whether changes in

service level will result in overstocks or understocks in addition to providing

guidance on inventory reallocations. The addition of a forecast attention index alerts

the supply chain managers to shifts in levels, trend and demand variability.

For visualization aids, the tool provides graphical representations of forecast and

inventory optimization, bar graphs depicting the proportion of cycle stock and

safety stock, and histogram view detailing simulation results from expected demand

over the lead time.

SmartForecasts has found a niche in serving companies whose key inventory

objective is managing intermittent demand. (Nucleus Research p197 - Smart

Software ROI case study - Metro Transit, November 2015.) Nucleus expects its

subscription-based cloud offering to win deals from price-conscious customers

seeking a quick payback on their investment.