Inventory Hub Optimization via Consumption Pattern Analysis

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Solution Overview

Problem

Enterprise resource planning (ERP) systems face challenges in optimizing inventory management across diverse customer demands, leading to increased costs and inefficiencies in supply chain management.

Innovation Solution

A computer-implemented method and system that analyzes historical consumption and delivery patterns to identify optimal hubs for material stocking, determines quantity levels, calculates accurate lead times, and sets safety stock and re-orderable points, thereby optimizing inventory levels and service levels.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If inventory levels are increased to meet diverse customer demands, then service level is improved, but storage costs increase

Engineering Contradiction:

Improveservice levelVSAvoidstorage costs

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The system segments the enterprise network into multiple regional hubs, each managing inventory for specific customer plants. This segmentation allows inventory to be distributed across multiple locations rather than concentrated in one place, reducing total storage requirements while maintaining service levels through localized stock availability.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The system dynamically adjusts inventory parameters including safety stock levels, re-orderable points, and upper limits based on analyzed consumption patterns and delivery patterns. This enables optimization of storage levels to meet service requirements while minimizing excess inventory costs.

Inventive Principle:

Principle #35Parameter changes

2Loss of energy

If inventory levels are decreased to reduce storage costs, then storage costs are reduced, but service level deteriorates

Engineering Contradiction:

Improvestorage costsVSAvoidservice level

Core Design Contradiction:

Loss of energyVSReliability

Solution Approach 1:

The system performs preliminary analysis of historical consumption patterns and delivery patterns to predict future material requirements. This enables proactive determination of optimal safety stock points and re-orderable points, ensuring inventory is available when needed while avoiding excessive storage.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system continuously monitors estimated lead times and compares them against threshold values, updating inventory parameters based on this feedback. This closed-loop control ensures service levels are maintained while optimizing storage levels in response to changing conditions.

Inventive Principle:

Principle #23Feedback

3Device complexity

If manual inventory management is used, then system complexity is reduced, but productivity deteriorates

Engineering Contradiction:

Improvesystem complexityVSAvoidinventory management efficiency

Core Design Contradiction:

Device complexityVSProductivity

Solution Approach 1:

The system automatically identifies optimal hubs, determines quantity levels, and monitors lead times by analyzing historical data without requiring manual intervention. This self-service capability significantly improves inventory management productivity while keeping the user interface simple and intuitive.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The system replaces manual inventory management processes with automated computer-implemented methods that analyze consumption patterns and delivery patterns. This substitution of mechanical/manual operations with automated computational processes dramatically improves efficiency while maintaining manageable system complexity through standardized algorithms.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

4Reliability

If safety stock is increased to compensate for lead time extensions, then service level is improved, but inventory costs increase

Engineering Contradiction:

Improveservice levelVSAvoidinventory quantity

Core Design Contradiction:

ReliabilityVSQuantity of substance

Solution Approach 1:

The system dynamically adjusts the safety stock point parameter based on analyzed delivery patterns and consumption characteristics. By optimizing this parameter rather than using fixed or excessive safety stock, the system maintains service levels while minimizing the quantity of inventory required.

Inventive Principle:

Principle #35Parameter changes

Solution Approach 2:

The system performs preliminary determination of safety stock points based on historical data analysis before inventory shortages occur. This advance planning enables setting appropriate safety stock levels that protect against lead time variations without requiring excessive inventory buffers.

Inventive Principle:

Principle #10Preliminary action

Data Source

PatentUS11526844B2System and method for optimizing inventory management

Publication Date: 2022.12.13 SAUDI ARABIAN OIL CO

AI summary

The present disclosure describes a computer-implemented method that includes: accessing data encoding historical records involving a plurality of materials within an enterprise network, the historical records indicating a consumption pattern of each material as well as a delivery pattern of each material; based on the consumption pattern, identifying one or more hubs to stock the plurality of materials for multiple customer plants in one or more regions of an enterprise network; based on the consumption pattern of each material, determining a quantity level for stocking the material at the one or more hubs to respond to a demand for the material from the one or more of the customer plants in the one or more regions; and based on the delivery pattern of each material, monitoring an estimated lead time to respond to the demand for the material being stocked at the one or more hubs and at the quantity level.