Retooling For Growth While Reducing Inventory By $3 MM
Manufacturer of voice and data network components
Materials Management Issues
After experiencing rapid growth, a leading supplier of voice and data network components was struggling to meet the needs of its expanded volume. Low service levels and missed promise dates had the company on the verge of losing some of its key accounts. The materials management processes that had been adequate for a smaller company were not able to support the new level of business. High inventory levels, poor scheduling, and raw material stock outs were commonplace. An outdated MRP system had been all but abandoned after a failed upgrade.
Created Key Metrics
Improved Inventory Accuracy
Re-launched MRP System
Introduced S&OP Process
Restructured Organization
The ProAction Group improved inventory management, upgraded the production planning process, and restored customer confidence. We introduced a series of key metrics and system inputs to better manage raw material inventory levels. The team focused on inventory accuracy at all steps in the manufacturing process, which helped to cut lead times. We also oversaw the re-launch of the enhanced MRP system, which gave greater visibility to the production schedule and improved order fulfillment.
The ProAction team recommended restructuring the supply chain organization. We brought in outside talent and put new job definitions in place. ProAction introduced documentation and training in areas that lacked sustainable practices. We implemented a Sales & Operations Planning process to align all functional areas with the goal of retaining customers through meeting promise dates and improving overall service.
$3MM Inventory Reduction
Order Backlog Reduced 75%
Throughput up, Cost down
Improving the client's inventory accuracy and planning resulted in a sizeable $3 million reduction in inventory. Labor, freight, and warehouse expenses declined. More effective production planning increased plant throughput. Customers saw immediate improvement as well: the overdue backlog was cut from 4 weeks to 1 week and order errors declined significantly. The rekindling of customer confidence was most evident when customers began to reduce their own safety stock of the client's goods.
