Manufacturer's inventory reduced by 50%
Background
Our client was facing high inventory levels of end products in a market with highly variable raw material prices. The risks of adverse trading positions in raw materials and of obsolete stock were considered too high.
Approach
In a client team we analysed the internal processes leading to inventory formation and the strong internal beliefs guiding this process. Based on hard data, new views were formed on crucial topics such as customer behaviour, forecasting accuracy, and production plan attainment, leading to a new way of inventory management which was implemented in the European plant and subsequently rolled-out globally. Controls were put in place for management to monitor progress and results accurately.
Results
Company staff adopted the habit of applying the new stricter discipline in inventory management. As a result, our client achieved a 50% reduction in inventory in nine months, maintaining a constant level of customer service.
