SOURCE: Aberdeen Group

May 08, 2008 10:00 ET

Closed Loop Inventory Management: Breaking the Logistics and Planning Silos

Aberdeen's Research Shows Best-in-Class Companies Are Striving for Closed Loop Inventory Management Practices

BOSTON, MA--(Marketwire - May 8, 2008) - Aberdeen, a Harte-Hanks Company (NYSE: HHS), announced the release of its benchmark report titled "Technology Strategies for Closed Loop Inventory Management." Inventory has been and continues to be the lifeblood of supply chains, especially in times of economic difficulties. Properly managed, it drives revenue and efficiency for companies by reducing working capital (with fewer inventories in stock) and simultaneously increasing customer service levels. Aberdeen benchmarked the people, processes, technologies, and metrics associated with inventory management in March 2008. Over 200 companies took part in the survey. Inventory management has become a mainstream planning activity with 58% of companies indicating that they have had an initiative in place for more than two years.

The concept of Closed Loop Inventory management is introduced in this report with 6 steps in the process: Analyze Demand, Segment Inventory, Optimize Inventory, Replenish Inventory, Manage Events, and Responsively Execute. The metrics that were benchmarked as an indicator of Best-in-Class performance with respect to the process are forecast accuracy, customer service level, cash-to-cash cycles, initial customer order fill rate, and perfect order percentage.

Best-in-Class companies are able to continuously manage their inventory throughout their supply chain to improve customer service levels, forecast accuracies and perfect order metrics. These companies follow the principles of closed loop inventory management.

Some examples of the Best-in-Class process differentiators are:

--  Best-in-Class companies are two times more likely to have the ability
    to determine safety stock targets for inventory at critical nodes in the
    supply chain
--  Best-in-Class companies are 50% more likely to have the ability to
    replenish inventory into distribution buffers based on customer demand
--  Best-in-Class companies are 2.5 times more likely to have the ability
    to view end-to-end inventory while providing available to promise inventory
--  Best-in-Class companies are three times more likely to have the
    ability to respond quickly to market events while executing to inventory
    requirements
    

"Only 31% of organizations are looking at inventory management as a competitive differentiator. By adjusting the existing processes to configure a closed loop inventory management process, organizations can gain significant improvement in customer service levels and reduced inventory carrying costs," said Nari Viswanathan, research director, Aberdeen. "This report details the process, organization and technologies which need to be considered in order to effectively achieve this."

A complimentary copy of this report is made available due in part to the following underwriters: Manhattan Associates and WebConcepts. To obtain a complimentary copy, visit: http://www.aberdeen.com/link/sponsor.asp?cid=4739.

About Aberdeen Group, a Harte-Hanks Company

Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen™ for insights that drive decisions.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information - Opportunity - Insight - Engagement - Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com.

© 2008 Aberdeen Group, Inc., a Harte-Hanks Company
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