Building a bespoke stock model to balance resource and costs
With £1.5m tied up in inventory and a Procurement team inundated with daily requests from multiple sites, our client wanted to understand if their min-max levels could be improved.
Any changes to inventory would need to have no impact on customer delivery.
People and systems
Finding and engaging with all stakeholders was key to understanding the full inventory journey, physically and systematically, highlighting elements critical to business continuity.
Sourcing the data to quantify the process was made easy by their use of an ERP system which allowed us to consolidate alternative materials and build a complete view of the historical parts usage. This new dataset permitted us to forecast future requirements for each part, by location.
In addition, we categorised each part by its consumption value and criticality to business continuation, using Procurement data and data linked to the request, again stored within the ERP software.
Using Excel for its accessibility and creation of minimal difficulty with IT departments, we built a bespoke, dynamic model that would allow decision-makers to balance value of inventory held with the risk to stock availability and effect on re-ordering frequencies, in creating reorder levels specifically optimised to the business.
Updated inventory
Over the following 12 months, total inventory value has decreased by 40% whilst also seeing a significant improvement in the availability of stock, resulting in an overall better asset readiness for their customer.
Furthermore, the demand on procurement reduced significantly, which enabled better supplier management and collaboration on the critical parts, leading to further time and money savings.
