CASE STUDY

Improving Inventory Management in Supply Chain to Control Cost of Operations

Jun 11, 2019

Improving inventory management in supply chain is the key aspect of any business, and the automotive industry is not an exception. Companies in this industry have focused on improving inventory management to improve operational efficiency over the last few decades. They continuously work to hold inventory at the lowest possible costs by analyzing different cost components. However, there are a few challenges that companies face during inventory management.  Here is a must-read case study for companies seeking to improve their inventory management process.

The Business Problem

The client is one of the known automobile manufacturers with a strong market presence in Europe and the American region. Despite earning annual revenue of over $35 billion, the company was facing predicaments in identifying risks due to supply-demand mismatch. The high value of products and complex product portfolios with multiple options were making it difficult for the company to match supply with real customer demand. Even if they tried moving from one planning period to next, the manufacturer could find only limited opportunity to adjust production. This compelled the client to engage with experienced inventory management specialists and achieve their business objectives.

  • Keep material cost under control to minimize production cost.
  • Facilitate data for short and long term planning and control of inventory.
  • Improve inventory management process to eliminate duplication in ordering or replacing stocks.
  • Ensure the continuous supply of inventories to the production to high vehicle inventory levels of specific configurations.

Formulating inventory management strategies is vital for companies to control the cost of operations. Request a free proposal and access our complete portfolio of inventory management solutions.

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Solutions Offered and Client Journey

The experts at SpendEdge analyzed market positioning and strength (vis-à-vis competitors) of each model. They also conducted competitor analysis to understand product offerings and competitive practices, specific features, and differences in the product strategy to estimate the sales of the company. Based on the insights gained, they could accurately forecast their product demand and planned their inventory accordingly. Also, with our help, they developed a contingency plan to address inventory issues occurring due to unexpected sales spike, cash flow shortfall, and manufacturers’ incompetencies.

The strategies implemented helped the client to segregate products and divide them into three categories namely high-value products,  moderate value products, and low-value products based on the frequency of sales. In addition, the specialists introduced cycle counting to audit their inventory. Instead of doing full inventory check at the end of the year, they spread reconciliation throughout the year by giving preference to higher-value items. They also initiated spot checking to identify problematic or fast-moving products and improved inventory management in supply chain.

Key Findings and Outcome

Saved Time and Money

Proper inventory management provided real-time monetary benefits to the client. Monitoring available products saved the time spent on recounting and helped them save money wasted on slow-moving products.

Improved Inventory Visibility

Regular audits conducted at all locations helped the client to enhance their inventory visibility and manage stocks efficiently.

Enhanced Accuracy of Inventory Orders

Improved inventory management process helped the client to determine the inventory they needed to have on-hand. This prevented product shortages and enabled them to manage inventory without having excess stocks in the warehouse.

Organized Warehouse

The inventory management solutions offered enabled the client to efficiently manage their inventory and optimize their warehouses by focusing on high-value products as their financial impact was significant. This improved their fulfilment process and helped them address the demands of their customers. For detailed insights on the importance of inventory management, request for more information.

Importance of Inventory Management

IIM

An efficient inventory management system allows companies to manage their inventory and stock item by keeping a track of their assets.  It analyzes real-time information and helps companies to make smart business decisions and improve sales by the right balance of stock in your warehouses. With controlled inventory, companies can enhance their customer service and successfully control the cost of operations.

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