Primarius Increasing Profitability

"Primarius' OMS Inventory Optimisation solution
enables companies to
reduce costs associated
with the storage and
handling of inventory
and improve revenues by
reducing the opportunities
for lost sales."

Increasing Profitability

Increasing Revenue

• Stop Out Of Stocks

• Reduce Lead-times and Improve Customer Responsiveness

• Improve Effectiveness of the Sales Team

Primarius’ OMS solution provide tangible, bottom-line financial benefits to business by

1. Providing business with sales forecasts for every item, in every location, to enable the business to       understand what products contribute most to margins and revenues (the 80/20 rule),

2. Helping business reduce product out-of-stocks which lead to missed sales and unsatisfied customers,

3. Provide sales focus on the core range which contributes most to margin and sales revenue,

4. Identifying slow moving or dead stock based on the forecast and enabling the business to take action before      they become a problem,

5. Enabling the business to plan promotional activity and know it will be supported by correct amounts of stock      in the right locations, and

6. Enabling co-operation with suppliers by providing them with forecasts, allowing lead-times and costs to      reduce and increasing competitiveness.

Primarius’ OMS Inventory Optimisation solution enables companies to reduce costs associated with the storage and handling of inventory and improve revenues by reducing the opportunities for lost sales. Our expertise in product sourcing enables a business to reduce its product costs with suppliers and Primarius’ warehouse optimisation solutions has proven successful to decreasing operational costs directly related to warehouse efficiency. To learn more about areas where we can assist your business to improve revenues and profitability.

Out Of Stocks

• Research into consumer goods sales indicate that the average percentage of items that are out   of stock is 8.3% of the range.

• This makes up an average of 4% of sales that are lost because product is out of stock.

• For promotions, this research shows that missed sales rise to 10% due to product being out of   stock

Overall OOS Extent
The Impact of Out-Of-Stocks

The impact of out-of-stocks is like a ripple effect. Although the value of lost sales could equate to a significant percentage of sales, the wider impacts are huge – not only dissatisfied or potentially lost customers, but additional direct and indirect costs are incurred to the business to manage both the customer and the backorder.

This post on the web, by Jim Bengier, in November 2009 provides some statistics on the impact of out of stocks -

What is the cost of customer satisfaction?

When the customer is happy with your brand you've got a loyal customer. What happens to your satisfied customer when faced with an out-of-stock? Here are just afew of the stats I was able to find on the topic.

  • Consumers facing out-of-stocks behave in a variety of ways - including switching the brand or changing the shopping location. About 37% of consumers will buy a different brand and 21% are likely to go to a different store. (ECR Europe)
  • When consumers encounter a stock-out, they will go to the competitor and purchase the product there 32% of the time. (Sterling Commerce)
  • More than 1 in 5 consumers (21.2%) coming into the door of Consumer Electrics retailers leaves without buying at least one product they intended to purchase due to out-of-stocks. (IHL)

OMS Identifies Potential Stock Outs

Our OMS Inventory Optimisation solutions identifies projected out of stock product by producing a forecast of future sales demand and then calculating stock on hand positions over time. Items identified as being potentially out of stock over a 12 week planning horizon are immediately flagged for action, allowing users to quickly determine appropriate corrective action to prevent or limit the out of stock.
Projected Stock On Hand
OMS Creates Product Forecasts

Primarius’ OMS Inventory Optimisation solution has advanced forecasting capability built into a simple-to-use screen. The system can forecast demand usage and produce a forecast over the next 12 months for every product sold and at every location from where it is sold, allowing for seasonality and promotional activity. Extended functionality to plan for sales events and Bill of Material requirements enable the business to plan for additional demand at a detailed level. This forecast can easily be amended and changes simulated to determine the impact on future sales.
Product Forecasts
Primarius’ OMS toolset creates a huge opportunity to analyse range performance and understand which products contribute most to business success. Pareto analysis identifies those products who make up the 80/20 – 80% of the revenue coming from 20% of the product.
Sales Forecast
Knowledge of product importance is a critical thing. With sales teams being asked to generically promote the range, they could find a lot of their efforts being unrewarded as some product are at the end of its life cycle. OMS enables sales people to understand which are products are the ‘movers and shakers’ and then determine the best course of action to manage the non performing product.

Promotions Planning

OMS has capability to manage promotional planning or events management by allowing Users to over-ride system forecasts or mark a forecast calendar with anticipated sales from the event. Previous sales success from a similar event can be captured and used in the forecast to anticipate a similar impact.

OMS then calculates the new total demand for the promotional period and adjusts the amount required to be ordered so that product does not run out of stock. If the remaining lead-time is not sufficient to get additional product in time, OMS provides warning to the User that a stock out will occur if the plan is continued with.
Promotions Planning
Supplier Collaboration

OMS produces detailed order release forecasts for every product by supplier with a planning horizon covering the next 52 weeks. Suppliers can be provided with this forecast, enabling them to improve planning and production schedules which should lead to lead-time and cost reductions.
Supplier Forecast
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