Inventory Routing

What is Inventory Routing?

Inventory Routing allows a supplier to deliver products to a number of customers to simultaneously optimize inventory management, vehicle routing, and delivery scheduling. This is applicable when a supplier needs to deliver products to a number of customers in an area, subject to various constraints.

Why use Inventory Routing?

Inventory Routing is relevant for companies who manage their customer’s inventory. In a Vendor Managed Inventory (VMI) environment, the supplier makes replenishment decisions for products based on specific inventory and supply chain policies.

The supplier must decide simultaneously:

1. When to service a given customer
2. How much to deliver
3. How to combine customers in vehicle routes

This practice is often described as a win-win situation. Vendors save on distribution and production costs by coordinating shipments made to different accounts. Customers benefit from increased fill rates, fewer stock-out situations, and lower inventory levels.

How to use Inventory Routing?

Inventory Routing is a complex computational problem and requires advanced mathematics. While there are a few academic approaches available on how to solve this problem, only few commercial software vendors have an off-the-shelf optimization software solution. Implementing this type of system allows companies to integrate the planning and execution aspects of VMI: determine when, where and how much of a particular product to deliver.

What are the results of optimizing Inventory Routing?

The results of optimizing Inventory Routing with ORTEC and combining it with optimized routing:

• Optimal allocation of orders to the most efficient delivery window planning and fleet availability
• Increased average drop sizes
• Increased resource time utilization
• Less trips and reduced transportation costs by 5% up to 10%
• Reduced total overtime paid up to 50% savings
• Increased truck capacity utilization by 10% by creating Full Truck Loads

Why contact ORTEC to optimize Inventory Routing?

ORTEC has a leading position in delivery Inventory Routing solutions. The optimizers integrate inventory optimization and routing optimization. The power of this integrated solution is explained by ORTEC in webinars and by various customer stories. Typical savings in the oil and gas industry are about 30% reduction in cost per liter.