Maximizing a product’s profitability through precise, shelf-level inventory management and replenishment will be the focus of a presentation by Ray Young on January 9, at CES’ Consumer Electronics Supply Chain Academy in Las Vegas.  The session, entitled “Source-to-Shelf Optimization: Intelligent Retail Inventory Management,” will be co-presented by Young, the Chairman of WebConcepts, and Stewart Dunsmore, Senior VP Supply Chain Logistics at Kuehne + Nagel.  Young and Dunsmore’s presentation will draw on a case study of Motorola, a customer of both Kuehne + Nagel and WebConcepts.

“The presentation will cover the critical aspects of managing the inventory at a low level of detail with frequent replenishment.  Tailoring the supply at the point of consumption to match consumer demand is the key to maximizing profitability,” said Young.  “For the retailer, it’s really all about the profit a vendor generates.  Retail space is a highly valuable asset and will be entrusted to the vendor who maximizes the profitability of that space.”  The emphasis on vendor profitability per square foot has grown dramatically, noted Young.  “The retailer has become very sophisticated in terms of measuring this level of performance, and the expectations for vendor performance are increasing rapidly.”

Young’s experience has convinced him and his clients that every step in the movement of inventory from source to shelf is an opportunity to improve or erode product profitability.  “Stewart and I plan to demonstrate how to optimize performance at every point in the flow, and relate that to the profitability you deliver to the customer.” The challenges and opportunities don’t end with the efficiency of product flow, either.  Young is adamant that tailoring the inventory at point of sale is equally critical.  “You must ensure that your replenishment execution considers the changing capacity constraints at retail as well as the natural demand life cycle of the product.  Too little on hand at product introduction is a loss you can never make up.  Too much on hand at the end of a product’s life can wipe out the good performance you worked so hard to achieve.”

In Young’s view, a company has to have a solid infrastructure of demand intelligence in place before taking the leap to shelf-level inventory management and replenishment.  “You have to be capable of integrating low-level demand signals from your customers into your forecasting process.  That’s been the thrust of our work with Motorola so far, enabling their collaborative forecast process to support the demands of shelf-level inventory management.  Their goal is to reach that next step in collaborative planning relationships and maximize their performance at the actual point of contact with the consumer.”

Ray Young spent his earlier years managing IT resources at Sunkist Growers and then as a consultant for Paramount Pictures. Sensing a major need in the marketplace for a shelf-level planning and replenishment solution, he started WebConcepts in 1998.