CASE STUDY

Inventory Optimization Reduces Understock Risks for Manufacturing Company

Sep 23, 2016

Business Challenge

Improving inventory replenishment schedules. A leading manufacturing industry client wanted Quantzig to conduct analysis on their inventory and help them improve replenishment schedules.

Situation

High stock-outs and erratic inventory replenishment schedules

The manufacturing industry client was facing challenges of irregular replenishment schedules, and increased stock outs despite carrying a huge inventory, due to low visibility on the inventory status.

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Solution/Approach

Stochastic model creation for supply uncertainty and demand volatility analysis

We created a stochastic model to handle supply uncertainty & demand volatility and analyzed key drivers such as seasonality, demand fluctuations, supply reliability, raw material constraints, etc. We helped the manufacturing industry firm setup right safety stock levels for both finished goods and raw materials.

Impact

100% visibility of SKU inventory with reduction in lost sales

Our solution facilitated reduced inventory levels and released cash flow available for investment, higher fill rates for optimal service, and reduced risk of understocks and overstocks. The client also achieved a reduction in replenishment cycles and 100% visibility of SKU inventory, with a reduction in lost sales on account of stock-outs.

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