RapidResponse Inventory Management Application

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1 This document outlines the RapidResponse Inventory Application Kinaxis RapidResponse allows companies to concurrently and continuously plan, monitor, and respond in a single environment and across business functions. Kinaxis offers a broad array of supply chain applications supported by RapidResponse s single data model and analytics engine, and accessed through a common user interface. This allows our customers to use one product to holistically manage multiple supply chain processes. By using a single product instead of combining individual disparate software solutions, our customers gain visibility across their supply chains, can respond quickly to changing conditions, and ultimately realize significant operating efficiencies. The Building Blocks RapidResponse applications can be deployed individually or in conjunction with other applications. Each of the RapidResponse applications are based on best-practices and standard process flows established by our years of successful deployments at a multitude of world leading manufacturers. The out-of-the-box applications can enable quick implementations, or can act as an advanced starting point for a tailored solution. Designed to be highly configurable, an application can be adapted as desired to meet a company s unique needs without the heavy and ongoing burden of custom coding. The unified set of applications present the building blocks to leveraging RapidResponse across the end-to-end supply chain, maximizing the crossfunctional value that can be delivered by the product.

2 Inventory The objective of the RapidResponse Inventory application is to balance the conflicting priorities of ensuring attainment of on-time delivery targets while balancing the inventory investment. Effective inventory management ensures that there is enough supply available to cover variations in demand and supply availability while minimizing the expense of carrying that supply. RapidResponse achieves these goals by delivering a robust and holistic inventory management process integrated with key applications, such as S&OP and Master Production Scheduling, on a platform that provides dynamic cross-functional collaboration capabilities. It also gives customers insight into the current inventory position and policies, and the impact these have on key industry metrics such as customer service levels, inventory quality ratio, and period of supply. The Added Value of Integrated Applications Among the greatest advantages of any given RapidResponse application is the ability to leverage it in conjunction with other applications as part of a broader, integrated solution. Depending on the need, significant added benefits can be achieved by using the Inventory application alongside one or more related applications to ensure synchronization across interrelated planning processes. Companies that use the Inventory application can achieve advantages and broader value by using it with connected applications such as (but not limited to): Inventory and Optimization Supply Action Master Production Scheduling Capacity (CRP) Inventory & Optimization Engineering Change S&OP Order Fulfillment Supply Action Sales & Operations Inventory Supplier Collaboration Aggregate Supply Capacity (Constraints) Demand Master Production Scheduling Integrated Project The RapidResponse and Simulation Engine

3 Performing Inventory with RapidResponse With the Inventory application, you can: Use the Inventory Quality Ratio to develop targeted solutions that increase the performance of your inventory Simulate changes to inventory policies to balance tradeoffs between inventory and customer service levels Leverage the built-in collaboration capabilities to effectively manage inventory changes caused by internal or external factors Integrate inventory management with S&OP, MPS, and SAM in a single platform to maximize benefits across the organization Have RapidResponse recommend intelligent resolution options for mitigating inventory that is not aligned with corporate targets Get a sense of forecasted inventory exceptions, such as parts misaligned to targets and revenue at risk, and collaborate with key roles on resolution options In the Inventory application, collaboration occurs across these functional roles: Role Inventory Planner Material Planner Master Scheduler Responsibility Evaluates inventory target levels and updates inventory policies to ensure that service levels and inventory targets are being maintained. Inventory Planners define ordering policies such as safety stock and minimum/maximum ordering quantity, and control the costs associated with the inventory. They also address inventory issues related to an achievable master schedule, while minimizing overall inventory costs but maintaining desired customer service levels. They also analyze the excess and obsolete inventory position, and manage such inventory. Primarily, the Inventory Planner collaborates with the master scheduler, material planner and demand planner roles, but may also collaborate with the customer service representative and finance roles for various activities within the Inventory process. Manages the detailed plan for components and raw materials required to satisfy the master production schedule, and analyzes and manages the excess and obsolete inventory position. This role collaborates with the master scheduler to address material issues in the master schedule and with the inventory planner to resolve any identified excess and obsolete inventory. Translates the high-level supply plan generated in the S&OP process into a detailed achievable production schedule of end items. Master schedulers establish the anticipated end item build schedule by disaggregating the supply plan and planning supply orders to satisfy customer demand and maintain customer service levels, while balancing the competing priorities of respecting defined inventory targets and minimizing inventory investment, and maximizing effective utilization of capacity. They also communicate order commit dates, resolve gating orders, and evaluate and manage the impact of new orders on the existing schedule. The Inventory application provides the following benefits: Cross-site inventory visibility with the ability to proactively identify inventory risks and opportunities Identification of products/parts that are not performing to financial and operational targets, and subsequent re-examination of inventory policy settings for better performance Maintenance or reduction of inventory levels across categories Insight into the impacts of trade-offs between on-time delivery targets, revenue risk, and inventory levels to maximize corporate performance Visibility into lead time variability and historical lead time trends Focused views of period ending inventory by inventory quality (active vs. excess), ABC code, and part class

4 Inventory Process Components Update inventory settings, definitions, and annual plan targets Perform cadence-driven updates of inventory settings to evaluate their impact on inventory position Plan and optimize inventory (optional RapidResponse application) Perform cadence-driven inventory planning and optimization, including SEIP and MEIO calculations Assess inventory position and input performance Compare customer service levels and inventory position to corporate targets Assess projected excess and obsolete inventory Review and mitigate inventory exceptions Processes in RapidResponse are enabled by the creation and sharing of collaboration scenario(s), notification to responsible user(s), review/edit by user(s), and the acceptance or rejection of proposed adjustments. 4 Commit to resolution(s) Simulate inventory changes in a private scenario and commit to working plan Inventory Manager Dashboard Manage Inventory Workbook

5 Unique RapidResponse Capabilities Rapid What-If Analysis and Deep Supply Chain Analytics Our patented what-if simulation technology enables users to rapidly create many versions of their supply chain environment (called a scenario), regardless of data size, to simulate changes in real-time without impacting the live data. Thousands of simulations can be supported concurrently within a single instance of RapidResponse. Inventory managers can test multiple inventory related scenarios and evaluate options by comparing key performance indicators. Users can create private scenarios to simulate inventory transfers and changes to order modifiers and safety stock quantities and policies. RapidResponse analytics continuously and automatically recalculate the inventory position in response to changing input data. RapidResponse has the ability to mimic ERP data models to ensure calculations are consistent across disparate systems. What-if Analysis Supply Chain Analytics Collaboration and Responsibilities Collaboration in RapidResponse is event-driven and is achieved through the creation and sharing of scenarios with all responsible parties. Users collaborate around a particular what-if analysis and are doing so in the same system from which they are drawing the data, and in which they will execute the resolution. Inventory managers can create what-if scenarios with proposed inventory policy changes, then share them Role-Based Collaboration Consequence Evaluation and Alerting with master schedulers and material planners for resolution or feedback. The Responsibility capability identifies the master scheduler or planner responsible for a given part in order for the inventory manager to contact the correct users for collaboration. Collaborators can create a child scenario of the collaboration scenario in order to simulate any required planning or scheduling actions. The inventory manager can keep track of the collaboration progress and alternatives that are being considered. Exception-Driven Analysis RapidResponse s exception-based analysis focuses on evaluating events and actions based on their potential impact to the business. It is never enough to know that something has occurred. You need to understand the context, the consequence, and the next steps. Results of what-if scenario simulations can be evaluated versus corporate objectives to find the right balance between decisions requiring trade-offs. The inventory manager can monitor and be alerted of supply chain issues that negatively impact inventory quality and customer service levels. RapidResponse is configured to highlight issues for the inventory manager so they will see which actions are achievable and will provide the greatest impact to performance metrics such as revenue or margin.

6 Closing the Loop Most applications have the ability to close the loop on data, where data created/edited within RapidResponse is automatically sent back to the transactional system (ERP). This avoids a user having to update two systems. In the Inventory application, the following changes are captured and can be sent back to the transactional system. Safety Stock Quantity Inventory Transfers Time Fence Policy Changes Managing Performance In addition to the standard corporate measures of revenue, margin, on-time delivery and constraint utilization, metrics associated specifically with inventory management are also included in the application s out-of-the-box dashboards. This allows for focused management of the performance measures that are most applicable to the function at hand. Measures presented in the Inventory Manager dashboard include: Overview On Time Order Lines by Due date: Compares the on-time order lines by due date to the target service level. Period Ending Inventory Value: Compares period-ending inventory values to the annual plan target. Inventory Quality Ratio: Compares the calculated inventory quality ratio to the target inventory quality ratio. Customer Service Level Variance of On-time Order Lines by Due Date and ABC Code: Shows the target for on-time order lines by due date and the variance from this target for each ABC code and for the total. Number of Stock-outs: Shows historical and projected stock-outs using current capable-to-promise data. Projected Late Revenue: Summarizes revenue that could potentially be lost due to late parts. Inventory Details Number of Parts Above and Below Periods of Supply Targets: Shows the number of warning and critical parts that are projected to be above the maximum periods of supply target or below the minimum periods of supply target in each period. Parts Currently Above and Below Periods of Supply Targets: Shows parts that are currently above the maximum periods of supply target or below the minimum periods of supply target. Inventory Quality Ratio (IQR) Projected Ending Inventory Value by IQR Category: Summarizes the value of inventory that is projected to be on hand in each of the IQR categories at the end of each period. IQR by ABC Code in Selected Focus Period: In the selected focus period, compares the inventory quality ratio at the end of the period for each of the ABC codes to the target inventory quality ratio.

7 Getting Results Kinaxis RapidResponse enables customers to drive tangible business outcomes by both improving and accelerating analysis and decision making within and across supply chain functions. 20% Improvement in Inventory Turns With RapidResponse, we ve improved inventory turns by 20%, due to our ability to avoid stock outs by having much faster prediction capabilities. Source: Business Project Manager, Large Enterprise Electronics Company TechValidate ID: 03F Better Inventory With RapidResponse we improved event management for supply with non conformance and improved adherence to inventory targets above 95%. We are consistently managing abnormal scrap below budget (20% below budget). Source: Executive, Global 500 Pharmaceuticals Company TechValidate ID: 1A E Research by

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