At the start of 2025, retailers face an uncertain economic climate. Despite falling inflation, consumer spending fell back in the last quarter of 2024.
Many retail chains are experiencing difficulties (suspension of payments, redundancy plans, deliveries not honored, pressure on product availability from manufacturers, etc.). When it comes to the supply chain, instability is becoming the norm (geopolitical crises, raw material shortages, climate change, etc.), forcing retailers to be resilient.
In this context, the implementation of an APS (Advanced Planning Systems) solution is a key lever for optimizing your operational performance and ensuring your brand’s long-term viability and competitiveness. By anticipating demand and automating replenishment calculations, it guarantees optimal stock levels and maximized customer availability.
Adopting an APS solution is therefore a strategic investment . However, before committing to such a project, it is important to evaluate the cost of the solution in relation to the expected return on investment (ROI).
As part of the marketing of our APS solution – OptimiX XFR, we have put in place a rational methodology to help our prospects and customers assess the ROI of such a project .
Key indicators for measuring the ROI of an APS project
To assess the ROI of an APS project, you need to reliable performance indicators that reflect the impact of a supply chain solution . Here are the main KPIs we take into account for our OptimiX XFR solution.
Inventory levels
The aim of an APS solution solution like OptimiX XFR is to reduce inventory levels in units and in value, while increasing item availability.
Optimizing stock levels is essential in an APS supply chain project. If stock is oversized, it leads to higher costs (storage, holding, handling and maintenance costs, etc.). It can also generate dormant stock, breakage, or sales at a loss.
With an APS solution, you can optimize inventory management :
- Thanks to improved forecasting
- By calculating safety stocks adapted to each product and site, calibrated to meet expected service levels
- By defining calculation rules for service rates adapted to each product and site. For example: 99.9% for a best seller, 90% for a slow mover, 90% for substitutable products, etc.
With some OptimiX XFR customers and in certain professions, it is common to measure a reduction in stock levels of more than 10 points. However, stock levels are inextricably linked to another indicator: the availability rate. Reducing stock levels only makes sense if we can ensure optimum product availability.
Product availability rate
The product availability rate measures the percentage of products available to customers at a given moment, in relation to total demand. It assesses a company’s ability to meet customer needs without running out of stock.
In theory, if we don’t take into account consumers’ switching to a substitutable product, a maximum availability rate will enable you to achieve maximum sales. An APS solution helps you avoid shortages and maximize your product availability.
With a solution like OptimiX XFR, out-of-stocks can be divided by 3 or 2. In certain business sectors, we have seen gains of 10 points in availability, while reducing inventories by 12 to 15%.
Breakage rate
To these two key indicators, we must add the breakage rate for fresh products or products with a BBD. The breakage rate measures the proportion of products not sold at their normal price, or not sold at all.
All these discarded products, or products sold at below cost, have an impact on margins and potentially on sales, as the drop in margin is linked to the cost price of discarded products, or to price reductions granted to sell off products close to their expiration date.
An APS solution helps streamline procurement, inventory and availability, while reducing breakage on perishable products. In some trades, the solution will reduce breakage by around 40%.
Productivity gains
Adopting an APS solution also has an impact on the productivity of supply chain teams.
As the application automates a number of processes, employees spend less time on repetitive tasks and can concentrate on higher value-added tasks, such as negotiating with suppliers or making strategic decisions.
More difficult to quantify than the previous indicators, we include a productivity gain of 20% in the calculation of a forecast ROI, which corresponds more to a minimum than to an observed average.
Forecast accuracy
Last but not least, improving precision is one of the ways of achieving objectives in terms of product availability and reducing inventory and breakage.
The accuracy of the sales forecast is a key indicator in an APS project. If you know exactly what you’re going to sell, you can buy more efficiently, optimize inventory and ensure product availability. Depending on product types and safety stock calculation methods, forecast accuracy also contributes to optimizing stock levels.
To make your forecasts more reliable, an APS solution offers a “best fit” approach, which constantly seeks to find the best model to obtain the best possible accuracy.
Our process to assess APS Supply Chain ROI
On the basis of the indicators we have just detailed, we have established a rational method to help our customers project the ROI they could achieve by deploying our APS Supply Chain solution – OptimiX XFR.
We have designed an APS supply chain decision-making tool and an easy-to-understand ROI evaluation method.
#1. Compile prospect/customer data on key indicators
To assess the potential ROI of an APS project for a customer/prospect, we start with their basic data:
- Sales (overall or on project perimeter)
- Margin rate
Next, we evaluate the impact of the stock reduction (thanks to the reliability of the planning process and the optimized calculation of the safety stock) and its effects on the other indicators listed above.
#2 Define improvement objectives
Based on the data provided by the customer, we establish working hypotheses that enable us to define realistic objectives for the first few years of the solution’s use:
- Reduce inventory levels by X%.
- Improved availability by X%.
- Reducing breakage rates
- Forecast accuracy gains
- Productivity and financial gains
Of course, the objectives depend on the prospect’s/customer’s initial context and sector of activity. For example, objectives relating to breakage rate mainly concern retailers who sell perishable products.
If the customer already has a very high level of availability, we won’t be able to achieve any spectacular gains in this area; on the other hand, Optimix will enable us to maintain (or slightly improve) availability while significantly reducing stock levels.
For example, for a distributor, we have set the following objectives:
- Gain of 5 forecast accuracy points resulting in a 2.5% reduction in inventory in a conservative calculation.
- 10% reduction in stock levels thanks to better segmentation (20/80) and finer parameterization of supplies.
- Revaluation of storage at a rate of 12%.
- Availability rate improved by +5 points s thanks to improved forecasting and optimization of safety stock.
- 25% improvement in productivity.
#3. Calculate expected results
This leads to forecast gains linked to :
- The inventory reduction Inventory reduction: amount of inventory reduction (in value), holding cost saved
- L’ mproving availability gains in sales, then in margin (by integrating the average margin rate)
In our ROI evaluation, we came up with a €857,750 gain in sales thanks to improved availability, or €298,500 in additional margin (34.8% rate).
With our hypothesis of improved productivity, we also estimate wage cost savings of €33,000 (based on €100,000 per year). To evaluate the ROI of the project, all that remains is to put these estimated gains into perspective with the cost of the solution.
A cautious, quantified approach
To assess the ROI of a Supply Chain APS project, we deliberately choose conservative conservative earnings assumptions .
This approachavoid overselling the expected benefits and guarantees realistic projections, based on proven data and factual adjustments to supply chain parameters. These figures are also adapted to the particularities of each company.
Similarly, in our calculations, holding and logistics costs are often underestimated so as not to overestimate gains. This allows us to take into account the variability of real costs (such as inventory obsolescence or fluctuations in transport costs), and ensures more reliable and secure projections.
Qualitative gains in addition to quantitative ROI
In addition to the quantitative ROI we evaluate with our method, the implementation of an APS solution is also accompanied by indirect and qualitative gains.
Although less obvious to quantify precisely, you can still incorporate them into your thinking about adopting a new tool.
These benefits include :
- The risk reduction APS: an APS supply chain solution helps minimize operational and strategic uncertainties to secure operations.
- A greater responsiveness to market trends Thanks to forecasts and projections, you can adapt quickly to changes and become more competitive.
- Improving customer satisfaction Optimizing product availability and reducing stock-outs boost customer satisfaction and loyalty.
- A better collaboration between departments APS promotes a shared vision of forecasts and inventories between marketing/sales, supply chain and finance departments.
An improved planning with suppliers and partners The sharing of forecasts contributes to improved communication and collaboration with other stakeholders in the supply chain.
OptimiX Solutions, your partner for maximizing supply chain ROI
In today’s environment, standing still on supply chain levers is a recipe for difficulties. Implementing an APS solution offers numerous benefits, both financial and operational. .
However, before getting involved with a publisher, you need to be sure of the ROI you can expect from using their solution. Beyond the figures announced, are the ROI promises based on a rational calculation method?
At OptimiX Solutions, we want to be totally transparent when it comes to ROI. That’s why we’re sharing our method with you.
Would you like a realistic evaluation of the ROI of your APS project? Contact us for a personalized simulation!
