The DemandCaster® Return On Investment (ROI) Calculator helps predict the impact of a comprehensive inventory optimization and demand planning initiative on your company's profit and cash flow.

Let's assume that the market sets the price for your products. If your company is one that struggles with managing demand optimally, you will typically realize the waste in three operational measures as compared to best-in-class companies in your industry:

• Inventory: Inventory $'s will be higher typically in WIP and FGI.
• Productivity: Productivity/utilization will be lower.
• On Time Performance: Will be lower and stock-outs higher.

The tables to the right provide metrics that you may use to compare against your companies performance. The first table shows how the three performance metrics differ in the three primary classes of company (equipment effectiveness is comparable to productivity). The Median Day Inventory table identifies the medium days of inventory by industry/market.

Instructions:

• Current: Input the blue highlighted cells with your current business or product line financial and on time performance.
• Goals: Input the desired productivity improvement and inventory reduction you desire. Use the tables above as a guide.
• Assumptions: Input your projected cost of inventory using the Cost of Inventory graphic to the right as a guide. Input the projected cost to implement a comprehensive inventory optimization and demand planning iniative.
• Future: The projected impact based on your input will be calculated. We assume productivity improvements will increase revenue by the same percentage with only the cost of material increasing. Labor and overhead assumed to stay the same. The reduction in inventory will generate both a cash flow savings and a P&L saving. The P&L savings is calculated by multiplying the cost of inventory against the total inventory reduction. The ROI is calculated based on both the cash and P&L savings generated.