Food Logistics 100
 
 
 
Success Stories

Redesigned Supply Chain Process Dramatically Improves KPI’s:

Industry: Consumer Packaged Goods (small/medium size business)

Problem: Finish goods inventory growth outpacing sales growth, diminishing margins and restricting cash flow/profitability.

Mission: Establish control over an increasing inventory asset and a decreasing customer order fulfillment performance. Reduce the amount of cash tied up in product inventory.

Results:

  • 50% reduction in product inventory within first year ($34M to $17M)
  • Saving for logistic cost of $4M/year (inventory carry cost)
  • Saving for transportation costs of $1M/year
  • Purchase costs savings of 10% where contracts were executed
  • Improved order fulfillment/reduced backorders

Actions: Led/directed operating staff managers in the analysis of business processes, problem solving, prioritization and implementation of solutions aligned with the self-developed strategy for a customer requirement driven supply network. Highlight of actions taken are:

  • Revised warehouse management procedures to establish control over the inventory network and the timely reporting of inventory records.
  • Revised procurement procedures to establish control over PO’s and the timely issue and reporting of purchasing records.
  • Revised customer order management to make incoming orders immediately visible to product planners for the “available-to-promise” process.
  • Developed and executed a strategic sourcing strategy with these features:
    • Reduce the supply base (domestic suppliers)
    • Increase supplier involvement (partnership):
      • Supplier owned inventory (eliminate consigned inventory)
      • Lead time reduction
      • Requirements planning (communicate customer demand)
      • Direct ship bulk
    • Introduced “requirements contracts”
    • Introduced target pricing
    • Introduced global contracts for common raw materials
  • Developed and implemented improved forecasting process:
    • One plan concept
    • Link sales, R&D, operations and finance
  • Installed forecasting and requirements planning systems
  • Developed and staffed an Inventory Management function

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