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ToolsGroup Introduces Innovative New Approach to Supply Chain ...

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ToolsGroup Introduces Innovative New Approach to Supply Chain ...

  1. 1. Media Contact: Jeffrey Bodenstab ToolsGroup 617-263-0080x209 jbodenstab@toolsgroup.com ToolsGroup Introduces Innovative New Approach to Supply Chain Planning (SCP) First SCP Solution with End-to-End Probabilistic Modeling BOSTON, MA, JANUARY 8, 2009 – ToolsGroup, a global provider of demand-driven inventory optimization solutions, today announced an innovative new type of supply chain planning (SCP) solution, the first of its kind to incorporate probabilistic modeling across all main supply chain planning functions. ToolsGroup’s new SO99+ SCP solution has a lower cost of ownership than traditional planning approaches and also addresses the growing problem of lumpy demand. Until now, all supply chain planning suites have used deterministic APS (advanced planning and scheduling) logic. However, today supply chains are experiencing increased random behavior due to shorter product life cycles, product promotions, longer supply lines, and the current economic uncertainty. This creates a disconnect between these deterministic models and real life supply chain behavior. To compensate, in recent years many companies have added a separate inventory optimization module that uses probabilistic modeling to address demand variability. This approach is helpful, but not sufficient, to overcome the pervasive manual expediting common in most high variability supply chains. A New Probabilistic Approach Today’s breakthrough is a new approach that permits the probabilistic (or stochastic) nature of the supply chain to be integrally modeled in all of the SCP functions, including demand forecasting and planning, inventory management and optimization, and replenishment and transportation planning. For the first time, the probabilistic models cut across the end-to-end supply chain and its planning functions. There are three benefits to this new approach. The first is that users can now forgo the added cost of a separate inventory optimization module. For the first time, they can achieve significant inventory optimization benefits (reduced global inventory and improved customer service) directly from a targeted, compact SCP solution. “Most companies don’t want to buy an expensive SCP system and then an inventory optimization solution to fix it,” said Joseph Shamir, CEO of ToolsGroup. “This game Tool sGroup , Inc . Eleven Beacon Street ∙ Suite 1300 ∙ Boston, MA 02108 617.263.0080 (phone) ∙ 617.263.0450 (fax) ∙ www.toolsgroup.com
  2. 2. changing technology is perfect for companies who want affordable supply chain planning with the rapid benefits of inventory optimization.” The second benefit is that unlike large suites with wide footprints, this SCP solution employs a tightly integrated probabilistic backbone. Rather than constantly adjusting and tweaking to accommodate the randomness of the supply chain, this new system directly addresses the stochastic supply chain behavior. The resulting solution is easier and less expensive to use. Tackling Lumpy Demand The third benefit is that this approach can handle the problem of intermittent or “lumpy demand.” Demand buckets are getting smaller as product proliferation creates more alternatives and shorter replenishment cycles create more time slices. A recent ToolsGroup analysis of eight branded companies found that typically more than 70% of their SKUs were in the lumpy demand category. Yet, the lumpy demand problem has not been conquered by traditional supply chain planning. As Lora Cecere of AMR Research concludes in “Of Long Tails and Supply Chains” (January 4, 2008), “The deterministic, replenishment logic traditionally found in advanced planning and scheduling (APS) technologies are not a good fit for the long end of the tail. …. Bottom line, in this scenario, traditional inventory techniques—safety stock logic based on normal demand distribution — just don’t work.” Anyone interested in learning more about this survey and Lora Cecere’s analysis can register to attend an upcoming Supply Chain Digest web seminar entitled “Mastering Lumpy Demand” on January 15th at 11:30 AM EST by going to http://www.sctvchannel.com/Videocast_Mastering_Lumpy_Demand.php. This ToolsGroup solution is available immediately both as a perpetual license and in an on-demand version. There are currently seven customers, located in the United States and Europe, already successfully using the solution. Examples will be presented at the above web seminar. About ToolsGroup ToolsGroup is an innovation partner for companies who want to achieve outstanding customer-service levels and less global inventory. Using our demand-driven inventory optimization and supply chain planning solutions, our customers improve daily forecast accuracy and correctly set safety stocks to significantly cut inventory and achieve customer-service levels up to 99+ percent. ToolsGroup has more than 150 customers in 31 countries worldwide. For more information on ToolsGroup and its solutions, please visit www.ToolsGroup.com. ToolsGroup , Inc . Eleven Beacon Street ∙ Suite 1300 ∙ Boston, MA 02108 617.263.0080 (phone) ∙ 617.263.0450 (fax) ∙ www.toolsgroup.com