How does DRP software reduce inventory and stockouts at the same time?

It sounds counterintuitive, but reducing inventory and reducing stockouts come from solving the same problem: poor inventory positioning.

Most companies try to avoid stockouts by adding safety stock everywhere. The result? More inventory… but still shortages in the wrong places.

DRP software takes a different approach. Instead of protecting each warehouse individually, it optimizes inventory across the entire network. It continuously analyzes:

• demand signals (by location and SKU)
• current stock levels across all nodes
• lead times and supply constraints

Based on this, it determines where inventory is actually needed, not just where it happens to be.

In practice, this means:

• less excess stock sitting in low-demand locations
• better availability where demand is real
• earlier detection of potential shortages
• smarter transfers between warehouses instead of emergency orders

For example, companies like Camif have reduced stockouts while scaling their operations, and others like Plum have significantly lowered inventory value — not by cutting blindly, but by placing stock where it creates value.

The key is simple: not more stock — better distributed stock.