Making inventory management sustainable with algorithms and analytics

⇨ An inventory management solution improves forecasting accuracy and identifying criticality of stocked parts and equipment

⇨ An optimised MRO inventory means reduced energy consumption related to storage and transportation

⇨ Sustainability improves an organisation’s brand reputation, helping attract environmentally conscious customers

Combining advanced algorithms and prescriptive analytics can make inventory management for organisations more sustainable by improving forecasting accuracy and identifying criticality, according to a recent COSOL blog post. 

An inventory management solution that provides a detailed view of an organisation’s maintenance, repair and operations (MRO) inventory, and recommendations of reorder levels for individual stock items, can reduce an organisation’s energy consumption while also using only the exact amount of storage space required. 

An inventory management solution also automates processes and embeds inventory management best practices. Applying a rules-based engine to analyse variables including criticality, lead time, price and usage would further reduce waste and emissions. 

Integrations with an organisation’s ERP like SAP S/4HANA or enterprise asset management (EAM) software like SAP’s SAP S/4HANA Asset Management also improves collaboration among maintenance, procurement, inventory and supply chain teams. 

Other capabilities like telematics and advanced analytics improve vehicle utilisation in logistical applications by optimising transportation routes. 

Research commissioned by COSOL found using an inventory management solution can help reduce unplanned downtime related to parts by up to 50 percent; up to 40 percent reduction in inventory costs; up to 35 percent savings in maintenance budgets; and up to 25 percent increase in service levels. 

Why optimise MRO inventory? 

An organisation’s MRO inventory that has been right-sized helps make informed decisions about managing assets while increasing service levels, minimising unplanned downtime caused by missing parts and freeing up working capital. 

Making logistics processes more efficient would reduce Scope 3 emissions – or indirect emissions from activities like flying commercial planes and the consumption of products or services – by optimising transportation routes. 

Sustainability also improves an organisation’s brand reputation as an effective environmental steward, helping attract environmentally conscious customers. It also future-proofs organisations by providing a buffer against evolving environmental regulations, supply chain constraints and consumer demands. 

Holding an excess of tools, spare parts and consumables means procuring, storing and handling that inventory can get expensive, while also risking parts becoming obsolete when they remain in storage longer. Holding too little however runs the risk of having unplanned downtime because there isn’t enough inventory. These challenges are more intense across numerous locations and varying stock item shelf live. 

COSOL said one such solution to meet those needs is IBM’s cloud-based MRO Inventory Optimization solution. It improves visibility and data sharing for MRO inventory, providing organisations operational control and accurate data around the process of ordering, storing and moving items and equipment. It also captures, analyses and applies data-driven insights to improve inventory management processes.