“I feel like we have too much inventory.”  

Maybe we’ve uttered these words while scratching our heads.  Did you know there’s a way to objectively tell if you have the right inventory and what it should be costing you?  Consider this real-world example:

A PE-backed, $175 million consumer goods company was scaling-up its production and wanted to know what it could reliably commit to selling as capacity grew. 

Deliveries to the customer needed to be at least 98% On-Time and In-Full and because the shelf-life of the product was limited.

With the help of an Advisor, the company was able to understand optimal stocking levels and production schedule to optimize their service level to the customer and mitigate inventory risks.

From this information they were able to build statistical modeling that helped them make important decisions, such as:

A long warehouse aisle
Inventory: It's Not Just A Feeling
  • The quantity of product they could commit to selling and meet the 98% product availability target
  • A minimum and maximum level of inventory they needed to keep on-hand, per SKU
  • What/when to produce in order to meet their desired service level
  • The optimal production quantity (batch size) and schedule
  • The most valuable ways to invest their capital, for example:
    • Improving production yield
    • Extending shelf-life
    • Increasing batch size

They did not need to implement expensive systems to accomplish this work, nor did they need years of data to get insightful information.  The Advisor was able to help them fit best practices to the Company in common tools such as Microsoft Excel.

They could clearly see the financial impacts of their inventory management.  They were able to reduce stock-outages by 50% in the first year. They also knew what actions to take if their inventories became too high, such as changing production or leveraging marketing strategies.  They were able to reduce expired inventories by 25% in the first six months simply by better monitoring their consumption and aging inventory trends.

The company no longer wondered if they had the right amount of inventory. They now knew what their minimum inventory levels could be and how to drive decisions when levels were too low or too high.

This is the experience our Advisors can bring you. 

Want to learn more about how you can drive impressive business performance at your Company?  Contact us at info@waypostadvisors.com, or check out our Services & Expertise.