Stock and product range optimization are very different processes but they are totally related and interdependent.
Stock optimization or inventory optimization basically consists of adjusting the stock as much as possible without negatively affecting service levels and therefore achieving the ideal size.
Product range optimization seeks to find an optimal set of products that the company should offer to the market, traditionally, it is a balance between offering larger assortments to maximize customer service vs. smaller assortments to minimize costs associated with manufacturing or distribution.
For stock optimization, companies have a lot of data and analytical tools, most ERPs on the market have specialized modules that work based on historical sales and demand forecasts that guide them in making decisions. In addition, there is a wide offer of tools available on the market, some of them are:
(SAP, Oracle and IBM also have their own solutions)
As we can see, stock optimization is a process that is generally very well resolved and should not give us too many problems.
But instead when we talk about getting product range right, specially in vehicle parts, we find that it is not easy at all, and today it is still much more art than science, but making wrong decisions can be disastrous.
The main reason for this problem is that it is difficult to define the complete universe of products available on the market and even more so to determine decision making in an analytical way.
This problem gets worse when we talk about automotive parts specialists, these companies are the ones that must have more extensive product ranges, continually adding new products to try improve the level of customer service, so it is more likely that they have low rotation products and many obsolete products.
Discover opportunities within the market that currently does not cover a product range and, above all, determining in advance the sales potential that these products will have, is essential to increase profits and the profitability of the company.
There are some solutions on the market that, although they are not specialized for automotive parts, can help us understand the functionalities of this type of solutions:
(SAP, Oracle and IBM also have their own solutions)
Factory Data has a specific tool for automotive parts specialists, which uses the clustering of products and the analysis of market demand, to optimize the product range and at the same time be able to carry out proactive management in a fully automatic manner.
