A German CPG Firm Reduced Inventory Costs and Freed-up Millions in Working Capital Using Inventory Optimization
The client is a consumer-packaged goods manufacturer based out of Germany. With multiple warehouses spread across Central Europe, the client faced several challenges that created roadblocks in transporting the ready-to-ship products from their global manufacturing hubs to local warehouses and distribution centers. The organization soon realized that it had a sub-optimal inventory holding that led to high [...]READ MORE >>
The client is a consumer-packaged goods manufacturer based out of Germany. With multiple warehouses spread across Central Europe, the client faced several challenges that created roadblocks in transporting the ready-to-ship products from their global manufacturing hubs to local warehouses and distribution centers. The organization soon realized that it had a sub-optimal inventory holding that led to high working capital and reduced service levels. As such, they were looking at leveraging Quantzig’s inventory optimization solutions to effectively address the issues.
The Business Challenge
Multiple M&A’s in the consumer-packaged goods sector have prompted leading players to rationalize their supply chains and inventories. Though CPG players have realized that their competitive advantage relies on end-to-end supply chain management. Yet often they do not have the required domain expertise or the adequate technology to properly tune their supply chain, missing opportunities for improving business outcomes.
Ready to drive greater operational efficiency? Learn how an analytics-powered approach to inventory optimization can help you improve cross-domain interactions resulting in greater efficiecny and better performance.
The client, a leading CPG firm operates several manufacturing units across Germany, the wide variety of product offerings increased the complexity in managing inventory levels. To address such issues, they were looking at leveraging inventory optimization methods to improve customer service levels, maximize manufacturing efficiency, and assure the best mix of inventory to maintain optimum performance.
The client faced major challenges due to:
• Frequent stockouts in some of the warehouses
• The inability to meet the service level requirements at an optimal transportation cost
Solutions Offered and Value Delivered
The challenge, in this case, was to determine the best mix of products and the optimum inventory levels that had to be maintained in certain locations to best meet the demand while managing inventory costs. To help the client tackle this challenge we developed and implemented an inventory optimization model with various service constraints and all the costs incurred by the organization. This comprehensive approach to inventory optimization was carried out in two phases with differentiated service levels and multi-echelon inventory optimization solutions that helped the client to determine the adequate inventory levels that had to be maintained at different nodes in the distribution network.
Quantzig’s inventory optimization solutions also empowered the client to:
• Identify 45% savings in inventory holding costs
• Maintain their operating inventory levels to support demand and free up $2M in working capital
• Minimize the number of cross-docking points to meet SLA’s within particular zones
To gain a leading edge in the CPG industry it’s essential to sharpen your strategy and create a roadmap for future developments. Get in touch to know how we can help you create a roadmap and offer recommendations for supplier management, inventory optimization, product assortment, planning, store allocation, and logistics management.