Others set the standard. We raise it.
A key offering of 4R’s Value Creator Suite.
What Is an Inventory Benchmark?
The 4R Inventory Benchmark (IB) is the first of four phases in the 4R Value Creation Methodology. It uses a retailer’s summarized historical sales and inventory data to estimate the profit improvement that would be achieved using our profit-optimized replenishment solution. The data required for the IB can be supplied in a single delimiter-separated-value (DSV) flat file.
With more than a decade of experience working with a wide variety of retailers, 4R has accumulated a wealth of data about how our solution improves performance. We have used that data to build a mathematical model that estimates profit improvement based on certain key metrics. We extract those metrics from the data file you supply, and plug them into the benefit model, which then estimates the incremental margin dollars and inventory cost change that your business would realize.
The results of this model are directional in nature, designed
to indicate how much potential exists for improved profitability. This is generally followed by an Inventory Productivity Analysis (IPA), which provides a more precise measurement using simulations based on detailed historical data.
Inventory Benchmark uses a retailer’s summarized historical sales and inventory data to estimate the profit improvement that would be achieved using our profit-optimized replenishment solution.
The IB Data File
The IB data file provides the information used to conduct an Inventory Benchmark.
The data is for active replenishment items only, summarized at some level of the product hierarchy. The hierarchy level chosen is at the discretion of the provider, but we recommend that it be low enough to functionally differentiate groups of products. We require a minimum of one year of history data, and prefer two years of history.
Inventory Benchmark isn’t an educated guess. It uses data to build a mathematical model that estimates profit improvement based on certain key metrics. You will be positively surprised.