Promoting lean manufacturing through inventory analysis

About client

Our client is a global manufacturer, producing superior consumer goods nationwide. They have active and broad inventory units to meet the constantly fluctuating demands of their customers all over the world. Every day, their manufacturing units send out a minimum of 200 to 300 tons of goods.

Challenges

Our client has a few challenges with the raw material inventory as they try to meet customer demands while delivering good-quality products. Some of the challenges they face with inventory management and supplier relationships are:

Lack of granular level inventory tracking: They only had a high-level inventory tracking, which lacked granular insights like the type of raw materials they store, special storage restrictions it requires, what’s expiring sooner, what must be re-ordered soon depending on the future demand, and more. This became the root cause for the following problems they encountered.

Overstocking and understocking: Change in demand fluctuates their manufacturing schedules, which leads to overstocking or understocking of raw materials. While overstocking leads to wastage and cost implications, understocking leads to delays in production schedules, that causes out-of-stock on most demanded products.

Expiration risks: Due to poor inventory tracking, they have less insights on what goods to prioritize next. This leads to expiring and expired inventory, which requires utmost care to segregate and deal with, causing additional waste.

Supplier dependency: They were reliant on single suppliers for most goods, which led to understocking and other supply chain risks.

datakulture Solution

Our data analytics team analyzed their inventory situation and implemented an all-inclusive inventory analysis solution. The inventory analysis dashboard delivered near-real-time answers to their most specific inventory questions from what’s going out-of-stock to when it should be re-ordered for safe-stock levels.

Some insights the inventory management solution offered:

Inventory stock, value, and consumption analysis

• Total inventory value, compared with previous month’s value and quantities

• What’s the inventory current stock levels across all materials, highlighting understocking, overstocking, and at-stocking levels.

• Material-wise consumption, that highlights high-usage materials to maintain safe-stock levels and trigger alerts when it falls below the set value.

• Category-wise breakdown, that enabled monitoring based on plants and respective materials required for efficient material handling.

Expiration control and supplier management

• Real-time tracking of inventory items nearing expiration dates, so it could either be used on priority basis or discarded on time.

• Aggregation of supplier and inventory data to track all suppliers in one place and mitigate any possible risks.

Impact of the above solution

• Understocking reduced to 23%, ensured continuous and smooth operations.

• Overstocking reduced up to 28%, promoting more cash flow and freed up cost and less storage capacity and costs.

• Timely monitoring and use of goods brought down expiration wastage by less than 15%.

Conclusion

Stock analysis gained their inventory team control over their current assets, streamlining the process of supplier to stock to produce. They saved significantly on inventory maintenance, reducing waste due to expiry and overstocking. The availability of real-time inventory insights facilitated better procurement and inventory planning, while building more resilient supplier and supply chain management for them.