By: SCDigest Editorial Staff
The News: ToolsGroup has just announced an innovative new program that can help companies quickly reduce inventory levels and generate improved cash flow.
Why It's Worth Noting:
In the current financial crisis, as SCDigest has noted from the start, reducing inventory levels to generate free cash flow improvements will be important strategy for many companies, as the usual credit markets are tight and/or expensive. We also like the immediate, services- and results-focused approach being used by ToolsGroup with this program.
The News: Inventory optiimization software provider ToolsGroup this week announced a new program it calls
"Rapid Inventory Rightsizing," designed to help companies quickly optimize inventory levels and generate free cash flow as a result.
While ToolsGroup has traditionally sold its software to companies as a long-term technology approach to optimizing inventory levels, with this program the company will provide a service to do a "one-time" reset, using its software technology, to recommend appropriate inventory levels.
According to Jeff Bodenstab, VP of Marketing at ToolsGroup, under the new program ToolsGroup will collect data and use its software along with its own consulting services team or those of a partner to recommend inventory targets at the SKU level for participating companies.
"Individual companies will find different results from this process, but can typically expect to generate cash of between 10 and 30 percent of their inventory value, while maintaining the same or improving customer service," Bosenstab said. ToolsGroup has a customer base of more than 150 companies using its traditonal solutions, he said.
The program in a sense can be thought of as a "try before you buy" strategy, but will likely resonate with many companies given the challenges in the credit markets and uncertain demand many of them are facing. ToolsGroup has carved out a strong niche in the supply chain software market in part by its ability to handle highly variable demand.
"Many companies we engage with are focused on longer term inventory optimization and supply chain projects, whereas this program is specifically aimed at companies that are focused on a short term goal of improving working capital and easing the impact of the credit crunch,' Bodenstab added. " In the first case, we build the inventory optimization competence within the client as we implement. In this program, we use our own domain competency and experience to “jump start” the project for fast results."
He added that the entry level fee for the program is $30,000, but can go up based on scope and complexity. In addition to the one-time reset recommendations, the program can include
an ongoing review process, managed either inside or outside the company, to keep inventory targets aligned with changing conditions and insure a sustainable results over time.
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