Intelligent management system sizes and controls inventory in real time

By Roseli Andrion  |  FAPESP Innovative R&D – Inventory control is part of the daily life of most companies. It could be a hotel, a hospital or a car manufacturer: the need to manage these resources is equally crucial to the performance of the activities of each of these enterprises.

To facilitate this task, the startup E-Lean, based in the municipality of São Carlos, in the state of São Paulo, Brazil, has developed a solution with analytical intelligence and continuous data feedback to optimize inventory sizing and control in real time. The project is supported by FAPESP’s Innovative Research in Small Businesses program (PIPE).

The tool works like a supermarket in the metaverse, and the quantities of products available on the virtual shelves are automatically scaled in real time based on several factors, including demand patterns, internal operational performance, and potential supplier delays, among others. “The system agilely and automatically resizes inventory levels and replenishment batches with analytical intelligence and continuous data feedback,” explains Ricardo Renovato Nazareno, managing partner of E-Lean.

The solution is based on the principles of the Toyota Production System, known for its efficient inventory management. Unlike traditional tools, which mainly control balances, inflows and outflows, the E-Lean option emphasizes sizing and planning processes by answering questions such as “What types of inventory pay off?” and “What are the ideal quantities?” “There are still companies that size inventory sporadically, with a check every three months, for example,” says the production engineer.

Although the concept was developed by an automotive manufacturer, it can be applied to other industries. “It’s useful for inventory control of medicines and hospital supplies in hospitals, inventory control of food and beverages in resorts, and it’s useful for any other enterprise that does inventory management,” says Nazareno.

Consulting support

E-Lean is the digital arm of Hominiss Solutions, founded in 2002. Through consulting projects, the specialists realized the need for a technological tool, as many companies were using spreadsheets for inventory sizing and control due to gaps in traditional ERP systems. “We realized that there was an opportunity to develop a product that could be integrated with ERPs to fill these gaps,” says Nazareno.

This integration capability allows companies to acquire only the specific functionality needed to plan and control inventory levels, so they don’t have to change the entire system they already use. “With better-sized inventory, the company doesn’t lose sales due to a lack of product, and it also guarantees better cash flow because it won’t have excessive quantities of items it doesn’t need.”

Advanced analytical intelligence

In the solution, decision-making takes into account multiple variables. “Human analysis capacity is limited. At the end of the current phase of the PIPE project, the tool will process various pieces of information automatically and simultaneously, including, among other things, variations in demand patterns, internal operational performance and potential supplier delays. In the future, we intend for it to also consider the impact of other external factors, such as weather variations, the dollar exchange rate, tourism patterns, the entry of new suppliers, and products available on the market,” explains Angela Rossi Nazareno, production engineer and technological solutions manager at E-Lean.

A practical example of the possibilities of this analytical capacity occurred during recent virus outbreaks in coastal cities in the state of São Paulo. “Many pharmacies in Guarujá and other beaches ran out of medicines for diarrhea and malaise. This situation repeats itself every year and represents both a loss of sales opportunities and a lack of service to the population,” says Nazareno.

In such a scenario, the solution can actively monitor actual sales and consumption patterns to warn of discrepancies. “If you size your inventory to sell 20 units, but in practice you sell 25 or 15, the system suggests reevaluating the sizing factors. As actual behavior occurs, the solution informs you if there are any differences.”

In addition, the software helps ensure that the right products are available at the right time to avoid lost sales and to optimize cash flow by preventing excess inventory. “Our implementations have shown that it’s possible to deliver faster and at lower cost, characteristics that were previously considered antagonistic.”

The production engineer points out that the system contributes to increased productivity in production processes. “Well-sized intermediate stocks ensure that the company has the product it needs to produce at the right time. You don’t have to stop a machine because something is missing,” she says. “This avoids reprogramming due to missing components, which affects productivity and operational efficiency,” adds Nazareno.

Market differential

E-Lean has focused primarily on the medium-sized business segment after a study of more than 100 companies revealed a gap in the sector. “We identified that large software houses develop similar or even more complex products, but there wasn’t a simpler, more accessible solution for companies that don’t have large teams of data analysts,” highlights Angela.

The project already foresees a gradual evolution of the system’s functionalities. “Initially, we’re going to use the company’s internal data, but later we intend to incorporate external information such as temperature, weather forecasts and others,” says Angela. “This way, each company will be able to customize the factors that are most relevant to its business. We want to reach a level of refinement that takes into account that if the summer is hotter and the dollar is strong, there’ll be more tourists on the coast and therefore more garbage and more sick people. Based on that information, it’ll be possible to make better decisions.”

* Image by Andres Prada Garcia on Pixabay