The Opportunity
The company was burdened by trapped cash in inventory, poor service levels, and a lack of visibility into demand planning. Outdated ERP parameters and no customer segmentation led to inconsistent service and overstock.
Challenges
The company faced margin dilution due to excess external storage provided by 3rd parties. Service reliability was only 65% on-time-to-request, with mismatched inventory—overstock in some areas and shortages in others. ERP parameters such as MOQ, lead time, and safety stock were outdated, resulting in materials arriving 8.6 days too early. Without a formal Customer Service Offer (CSO) or portfolio stratification, MRP execution lacked consistency, leading to trapped cash and inefficiency.
The Solution
People:
- Built cross-functional ownership around parameter
governance and CSO. - Linked planning and commercial teams through
SIOP alignment. - Trained super-users to sustain MRP discipline and
refresh cycles.
Process:
- Rightsized parameters: safety stock, MOQ, and
lead times. - Formalized quarterly parameter validation and
adherence reviews. - Negotiated supplier stocking programs to
leverage short lead times and enable JIT
replenishment. - Established an Inventory & Service Control
Tower to monitoring mix and service adherence.
Platform:
- Standardized entitlement logic in the Inventory
Optimization (IO) tool. - Deployed KPI dashboards tracking service,
overstock, and understock. - Implemented portfolio segmentation to
rationalize SKUs and guide capital deployment.
Benefits
- Working Capital Efficiency: Released millions in tied-up capital through rightsized inventory.
- Service Excellence: Improved on-time-to-request performance, strengthening customer trust.
- Risk Reduction: Mitigated lead-time variability and excess stock exposure with structured governance.
- Scalability: Established a repeatable, data-driven framework for continuous improvement across sites.