CAO -- Perpetual Inventory Not Required

Perpetual Inventory no longer viewed as absolute requirement

Implementing procedures and technology to establish a true perpetual inventory has proven to be one of the most difficult hurdles to overcome and was originally viewed as a pre-requisite to CAO. New-generation CAO solutions only require a reasonably-accurate end-of-day on hand balance to drive significant results. Determined retailers are finding low cost and in-house solutions to calculate the on-hand quantities and rely on the new-generation CAO solutions to alert stores to high impact exceptions. A new strategy has also emerged in which retailers start inventory projects and CAO projects simultaneously. Even without considering inventory balances, the CAO solution adds value by producing more accurate demand forecasts, calculating item/location-unique safety stock needs based upon service level goals, and generating smart re-order and order-up-to points.