How Quantzig helped a leading F&B manufacturer who was facing an increase in inventory expires because of inefficient inventory management

Summary

Client Details: Recently, Quantzig engaged with a leading food & beverage manufacturer with a global presence. The client operated multiple manufacturing sites across Southeast Asian nations and served a diverse client base of over 200 customers, predominantly from North America and Western Europe. 

Challenges: With manufacturing sites spread across different Southeast Asian nations, effective inventory management across the global supply chain proved complex and challenging. The majority of the client’s demand originated from North America and Western Europe, creating the need for precise inventory management to meet customer expectations while minimizing the risk of stockouts and expiry. The client lacked accurate demand forecasting and production planning capabilities, resulting in excess inventory levels, poor rotation practices, and increased expiry rates. 

Solutions: After doing a thorough analysis, Quantzig built a robust mechanism to identify the exact amount of inventory required at each warehouse for each SKU. To further optimize inventory management, Quantzig developed a mechanism to raise flags based on the available shelf space for SKUs already present in the warehouse. Then, Quantzig developed the capacity to identify unsellable inventory at a specific warehouse and implemented a cost-effective solution to translocate those items to other warehouses. 

Impact Delivered

All of the above initiatives resulted in:

• 24% reduction in losses due to obsolescence
• 25% reduction in stockouts
• Near real-time visibility to inventory

Industry Overview

• The global food and beverage manufacturing industry is a dynamic and competitive sector that continuously evolves to meet the changing needs and preferences of consumers. This industry is a significant contributor to the global economy, with a substantial market size.
• With a focus on innovation, sustainability, and regulatory compliance, industry players strive to provide safe, high-quality, and diverse food and beverage products to consumers worldwide. 
• The industry leverages technology to enhance efficiency, improve production processes, and meet quality standards. Automation, data analytics, robotics, and artificial intelligence are increasingly utilized in manufacturing operations, supply chain management, and quality control processes. 

About the Client

• The leading Food & Beverage manufacturer operates over 50 manufacturing sites, strategically distributed across Southeast Asian nations. With a client base of over 200, their products cater to global markets, primarily generating demands from North America and Western Europe. However, the concentration of demand from North America and Western Europe posed challenges in inventory management, leading to a higher risk of stock expiry. 
• Due to the geographical distribution and demand concentration, the company faced challenges in managing stock expiry values. The extended supply chain and longer transit times increased the risk of products reaching their expiration dates before reaching customers. 

Challenges

• The globally distributed manufacturing operations of the food & beverage manufacturer created the necessity to maintain minimal inventory stock levels to optimize operational efficiency and reduce storage costs. However, this approach also resulted in challenges, including the risk of product obsolescence and subsequent financial losses. The extended supply chain and longer transit times associated with global distribution increased the likelihood of products reaching their expiration dates before being sold, leading to potential losses due to product obsolescence. To tackle this issue, the manufacturer focused on implementing proactive inventory management strategies. 
• The seasonal nature of the demand in North America and supply disruptions in Southeast Asia had created serious challenges in terms of maintaining supply chain agility and developing an inventory management strategy. The fluctuating demand patterns, driven by seasonal factors such as holidays or specific consumption trends, required the manufacturer to anticipate and respond to rapid shifts in customer preferences and order volumes. This necessitated a flexible supply chain that could quickly adjust production levels, inventory allocation, and distribution to meet changing demands. 
• The supply disruptions in Southeast Asia, which could be caused by natural disasters, geopolitical events, or transportation challenges, further complicated the supply chain management process. These disruptions affected the availability of raw materials, production capacities, and transit times, leading to potential delays or disruptions in the timely replenishment of inventory. 

Solutions

• After thoroughly understanding the challenges faced by the client, Quantzig developed a robust mechanism to address the issue of inventory management. They devised a system that could accurately determine the optimal inventory levels required at each warehouse for every Stock Keeping Unit (SKU). Using advanced data analytics, Quantzig analyzed historical sales data, demand patterns, seasonality, and other relevant factors to develop a predictive model. This model enabled the identification of the precise amount of inventory needed for each SKU at each warehouse, taking into account factors such as lead times, replenishment cycles, and customer demand. 
• To further optimize inventory management, Quantzig developed a mechanism to raise flags based on the available shelf space for SKUs already present in the warehouse. By leveraging data analytics and warehouse management systems, Quantzig’s solution monitored the shelf occupancy of each SKU in real time. When the available shelf space reached a predetermined threshold, the mechanism would raise flags or trigger alerts, signaling the need for replenishment or reorganization of the inventory. This proactive approach ensured that the warehouse remained well-organized, preventing overcrowding or inefficient use of space that could lead to difficulties in locating products or potential damage to items.
• We further built the capacity to identify the inventory which cannot be sold at a given warehouse and identified a cost-effective way to translocate them into other warehouses. By analyzing factors such as demand patterns, market conditions, and product life cycles, Quantzig’s solution could determine which inventory items were unlikely to be sold at their current location. Based on this analysis, Quantzig recommended suitable alternative warehouses where the inventory could be more effectively utilized or where demand for those specific items was higher. This allowed for a strategic redistribution of inventory to maximize sales opportunities and minimize potential losses due to product obsolescence. The implementation of this capacity provided the manufacturer with enhanced flexibility and agility in managing their inventory across different locations. It enabled them to proactively address sales limitations at specific warehouses, reduce the risk of product obsolescence, and improve overall supply chain efficiency.