SAMCA - MYTA

Companies maintain inventory of their products to cope with the effects of the randomness of demand, production and supply. Inventory needs to be adjusted to actual requirements for two main reasons. On the one hand, excess inventory is a source of operating costs and obsolescence and constitutes an investment that limits the company’s liquidity. On the other hand, the lack of product availability leads to lost sales that reduce the company’s turnover.

There are many inventory management solutions on the market. Generally, they offer stock control parameters (maximum and minimum stock, safety stock, etc.) and order management under different possible procurement policies. Advanced inventory optimization tools include specific uncertainty management and allow modeling of inventory based on demand characteristics, specifically addressing both fast-moving products and products with intermittent demand. Often, these solutions are integrated with demand forecasting modules that improve accuracy, reducing the level of uncertainty.

However, in a real context, the interdependence of logistics processes means that inventory management has an impact on other areas (transportation, production, procurement). Optimizing inventory without taking into account its effects on the rest of the company’s functional units can provide short-sighted solutions, which are optimal in the context of warehousing but unfeasible or suboptimal in global terms. The Kajal solution addresses the inventory optimization problem in an integrated way with the other processes of the company, providing solutions that guarantee its applicability within the company.

Problem

Production planning has a major impact on inventory, particularly in the face of uncertain demand and limited capacity of production processes. A production plan that is not adapted to actual demand leads to situations of excess inventory for some products, and stock-outs for others.

The project developed in collaboration with ITA aims to design a manufacturing plan that allows a better composition of the stock in the warehouses, taking into account the particularities of their production and storage processes. In addition, this plan must be dynamically adapted to seasonal and increasingly volatile demand and to the level of service demanded by its retail customers.

Results

Myta has begun using ITA’s Kajal solution to forecast demand and address the integrated problem of production, inventory and transportation planning. To this end, ITA has collaboratively accompanied the company in the development of the planning system, from the conceptual design to the implementation of the service.

Forecasting models designed in collaboration with ITA improve the company’s forecasting error, allowing for planning that is more aligned with actual demand. Inventory optimization is also providing satisfactory results, reducing the company’s inventory level and the costs associated with inventory and transportation, and maintaining the level of service to its customers. In addition, the time spent on planning is improved, as it is reduced from one day a week to a matter of minutes.