We have significant capital tied up in slow-moving inventory. How do we use AI to forecast our raw material needs and optimize our procurement schedule without risking stockouts on our top-selling products?

Question

Tyler Smith · Accepted Answer

Over-ordering raw materials to avoid stockouts is a common reaction to supply chain anxiety, but it strangles your cash flow. You can use predictive AI to balance this equation by analyzing seasonal demand patterns, historical sales trends, and lead times.

To operationalize this, integrate an AI forecasting tool with your inventory database and ERP system. The AI will generate purchase recommendations based on real-time sales velocity rather than relying on static reorder points.

Your purchasing manager remains fully in control of the final buy decisions, reviewing the AI recommendations before submitting orders to vendors. This process ensures you maintain a lean inventory while keeping safety stock for your high-margin, top-selling items.

Add raw material turns and inventory carrying costs as leading indicator metrics on your weekly Scorecard. Track these numbers closely during your Level 10 Meeting to ensure your cash flow is improving without hurting fulfillment rates.

By giving your purchasing lead better data, you increase their capacity and improve your company overall cash position.