For supply chain professionals, there is always a conundrum when balancing supply and demand. Traditional order management or enterprise resource planning (ERP) systems do their best to execute an optimal balance, which can be sufficient during normal operations. But a sudden imbalance is enough to throw planning systems off, requiring a brand-new fulfillment plan. After the past few years, it seems almost clichéd to caution about the dangers of supply and demand disruptions. Today, disruptions occur so frequently that while each individual instance is unpredictable, the consequences in terms of product availability are entirely predictable.
A sudden demand spike can lead to stockouts of popular retail products, while a severe weather event can interrupt the flow of critical supplies to consumers. The responsibility to react clearly rests with planning and execution leaders. From fulfillment analysts and omni-channel commerce managers to customer success managers, diverse functions ensure that inventory is properly rebalanced following a disruption. Ultimately, their mission is to strike the right balance between customer satisfaction and profitable fulfillment. But most of the available tools today make that task difficult.
While we can’t avoid disruptions, we can respond swiftly, strategically and profitably via intelligent inventory rebalancing — all within the time horizon of an existing plan.
The shortfalls of today’s inventory rebalancing approaches
Generally, these functions become aware of disruptions through a supplier, colleague or even a news article. At that point, they’re forced to navigate multiple systems and work through complex macro-based spreadsheets to find a potential solution. With these systems working in siloes, it’s difficult to communicate and coordinate across the organization. And manual analysis simply can’t manage the complexity of rebalancing, let alone keep pace with the urgent nature of this task.
The result? Scarce inventory is rarely allocated in the most profitable and strategic way, to optimize fill rates and service outcomes for top-priority customers — as well as maximize inventory utilization and return on investment.
Let’s explore this challenge through the lens of a consumer goods manufacturer. ABC Corporation currently has 100 units of inventory on-hand across four distribution centers (DCs) — more than enough to satisfy customer orders for 80 units. The initial allocation has been determined by the planning team, and the execution team understands how to optimally fulfill the orders.
Due to a storm, one distribution center (DC) that’s carrying 40 units of inventory is suddenly out of operation. To minimize stockouts and customer dissatisfaction, ABC Corp now must quickly address an unexpected shortfall of 20 units. This forces execution leaders to reengage the planning team and wait for a new fulfillment plan. Planners must quickly decide which customer orders get filled, search for an alternate source of supply and analyze transportation capacity. All the while, they are losing valuable time, and margins, every minute.
Besides calculating shipping costs from one supply chain node to another one, intelligent rebalancing must consider the strategic importance of each customer, the probability of selling each item at full price, and real-world operational constraints such as the availability of labor and transportation assets. An article in Science Direct notes that, for fashion apparel, there are typically a million binary variables to consider when reallocating inventory. Clearly, traditional approaches based on spreadsheets and human cognition are going to fall short.
Imagine a better, smarter, more profitable way
The good news? Thanks to digitalization, planners now have access to all the data they need to make optimal decisions based on customer tiers and priorities, as well as allocation rules like first-in-first-out (FIFO) and fair share. The bad news? They probably lack the advanced decision tools, powered by sophisticated, purpose-built algorithms, to perform all the necessary analysis and make rapid, profitable decisions.
Enter Blue Yonder Intelligent Rebalancer. Fueled by artificial intelligence (AI) and machine learning (ML), Intelligent Rebalancer is a flexible, cloud-native microservice that can be easily, rapidly and seamlessly launched to address the complex problem of reallocation.
As they reallocate inventory in near real time, planners can apply the same robust AI and analytics they used to originally plan inventory allocation using Blue Yonder Order Management. Intelligent Rebalancer leverages an AI- and ML-enabled optimization engine to make complex trade-offs across all orders — considering cost, service, margins, sustainability and other business objectives — and arrive at optimal decisions in microseconds. When the next disruption occurs, it repeats this cycle, continuously improving outcomes via ML.
With the Intelligent Rebalancer, Blue Yonder is the first software provider to support inventory optimization in both the planning and execution stages.
Build your own unique digital ecosystem
At Blue Yonder, one concern we hear from new customers is that, in their previous experiences, a new software launch itself represented a disruption. That’s why we’ve designed Intelligent Rebalancer as a cloud-native microservice that can easily be added on top of customers’ existing technology stacks.
Thanks to Blue Yonder’s microservices architecture, customers can embark on a composable journey — choosing the exact software capabilities and implementation pace that make the most sense for them. Like the larger Blue Yonder Commerce portfolio, Intelligent Rebalancer can be deployed individually or with additional Blue Yonder microservices. This approach allows customers to augment their existing systems with the unique benefits of Intelligent Rebalancer.
Intelligent Rebalancer also integrates seamlessly with other third-party solutions and systems customers are running in their supply chains. The result is a dynamic, flexible and unique digital ecosystem that looks different for every customer — because no two supply chains are created equal. Here’s a look at how Intelligent Rebalancer integrates and complements three typical planning and execution tools:
- Planning systems help manufacturers and retailers ensure that critical inputs, capacities and labor resources are aligned to satisfy customer orders. Intelligent Rebalancer doesn’t replace these planning systems; it augments the original plan during execution, driving near real-time course correction and responsiveness. When the original fulfillment plan is created, companies have the luxury of time. But Intelligent Rebalancer acts quickly, accurately and strategically when conditions have changed — and time is of the essence.
- Enterprise resource planning (ERP) systems help wholesale distributors fulfill bulk orders of finished goods. ERP solutions monitor and support service levels, reconcile payments and support the sales team. Intelligent Rebalancer integrates smoothly with ERPs to infuse intelligent decision-making and speed up their reaction time — avoiding a difficult ERP upgrade. Distributors can easily modernize and upgrade their operations without ripping and replacing existing systems.
- Order management system (OMS) solutions are especially useful for hardlines and softlines retailers. They help manage multiple sales channels, delivery options and even the returns process. Given the inherent complexity of last-mile delivery, many OMS solutions offer some level of order visibility and tracking. Intelligent Rebalancer can work across both inventory and order data to define the most efficient fulfillment plan.
Ultimately, Intelligent Rebalancer complements the capabilities of other planning and execution solutions — and ingests their data — to identify the optimal balance between customer satisfaction and profitable fulfillment.
