As supply chains are becoming increasingly more complex, managed services are gaining importance as this allows businesses to profit from expertise in those fields they need it, as they need it. Analytics demands will grow with increasing complexity, and managed services enable a business to focus on their core objectives, scale up and down as necessary while receiving support – ongoing or project-based – as they need it. Today, we're looking at a project in Inventory Management as a Service that we have implemented at one of our customers.
Our customer and their needs
Our customer is a manufacturer of consumer goods. Their supply chain contains:
- A large international supplier base.
- Multiple production sites.
- A global distribution center.
- Several regional or local distribution centers.
The customer uses a make-to-forecast strategy with central and local stocks for nearly all product groups. But inaccurate planning, unnecessary safety stocks, short product life cycles, and other effects lead to an inventory position that has reduction potential. Operational inventory management for slow and non-movers and phased-out stocks was missing and was the focus of this project.
The project and service: inventory optimization
We implemented inventory management as a service at the customer. With AIOinsights, we set up continuous overstock analysis determining slow or non-movers and discontinued stocks. We considered client-specific characteristics, supply chain segments, forecasting settings, and product lifecycles. In addition to the current inventory level, we also took the demand plan and customer order book into account.
We've created standardized action lists to be impactful and systematic in reducing the regulatory identified overstock. Based on this centrally provided action list, the supply chain planner gets an overview of current overstocks and is better enabled to execute the overstock reduction and take action to avoid new overstocks. Appropriate measures (e.g., promotional sales, warehouse transfers, scrapping), responsibilities for actions (e.g., sales, marketing, warehouse manager), realization date, and detailed task descriptions are determined and managed easily.
For better steering and success tracking, we've designed and developed a dashboard published in the client analytics environment.
The result: sustainable inventory reduction
Carrying out this inventory improvement initiative on slow-/non-overs and phased-out stock with discipline is instrumental in sustainable results, and a digital execution system can help with this. Over the time of the project, we managed to generate a sustainable decrease of 27% for phase-out stocks and 11% for slow- and non-movers. These approaches have also been applied to other symptoms identified as drivers of excess inventory.
Are you facing inventory challenges? The first step towards continuous improvement is understanding what is going on, and our inventory analytics on-demand bundle and AIOimpact as execution system can help you with this.