A category of applications designed to optimize the process of forecasting, planning, and managing inventory flow throughout a multi-echelon supply chain. It typically involves calculating the need for materials at various distribution centers based on anticipated customer demand and production schedules. For instance, a national retailer might utilize such an application to determine how many units of a specific product need to be shipped from a central warehouse to individual stores, considering factors like historical sales data, promotional events, and lead times.
Effective implementation is crucial for businesses striving to minimize stockouts, reduce excess inventory, and enhance overall supply chain efficiency. Its origins can be traced back to the development of Materials Requirements Planning (MRP) systems in manufacturing, but it extends the planning horizon beyond the factory floor to encompass the entire distribution network. The benefit lies in its ability to provide a clear, coordinated view of inventory needs across multiple locations, enabling proactive decision-making and improved responsiveness to market fluctuations.
