• Case Studies

    Inventory Management and Sales and Operations Planning

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The Background

  • Following a strategic distribution network review, a distributor of high end consumer goods rationalised its infrastructure from 13 to 4 locations
  • The organisation required an optimised inventory holding position for the new network, inclusive of inventory management policies, processes and procedures
  • The new network strategy encompassed a ‘multi-echelon’ inventory approach with the full range of products held at the National Distribution Centre (NDC) and rationalised inventory range holding at each of the three Regional Distribution Centres (RDC)
  • In addition, the organisation was also reviewing other key supply chain elements that would result in immediate improvement identification

How the Siecap team helped

  • Siecap team members used their design and diagnostic framework to review both the qualitative and quantitative aspects of the inventory management task
  • Included in the approach was the review of processes, policy, organisation, systems and performance metrics across the suppliers, internal operations and key customers
  • Inventory ranging and replenishment requirements were identified through the optimisation of safety, lot size and pipeline inventory, following an extensive SKU rationalisation program

Results

  • A supporting Sales & Operations Planning structure to manage the appropriate New Product Introduction and Product Phase Out processes
  • Inventory management business rules to guide the Products Life Cycle process
  • A validated inventory management policy framework, documenting the optimised fulfilment and inventory ranging strategy for safety, lot size and pipeline inventory
  • A reduction in inventory holding by 16% (excluding removal of SLOB inventory)
  • An improvement in Order Fill Rate by 12% from a low 80% to 95% on average

Case Studies