Large Retailer Inventory Management Assessment & Gap Closure Case Study
How to Lower Costs, Reduce Inefficiencies and Achieve Inventory Management Savings through a Supply Chain Strategy, Assessment and Optimization
February 2020
Case Study Overview
$10M / Year in Inventory Management Savings
A large retailer wanted to assess their supply chain and inventory management processes, specifically focusing on their Central Distribution Center (CDC) and Direct Store Delivery (SDS) processes and operations.
The goal of the exercise was to quantify the potential loss due to inventory management inefficiencies and put together a project plan to address the inefficiencies.
Problem Statement
To determine this potential loss, a Strategic Assessment (Internal Audit) was performed for the retailer’s supply chain/inventory management processes, which identified approximately $10M per year in Inventory Management inefficiencies.
How We Solved the Problem
In order to address this problem, we used our Supply Chain Strategy, Assessment and Optimization methodology and approach consistent of the following steps:
First, we reviewed the strategic assessment (Internal Audit) findings. We documented the As-Is (current) state including processes, procedures, and systems. Based on this review, the inefficiencies & gaps were categorized into the following 4 categories:
Incorrect or outdated pricing
Overpaid invoices
Receiving issues (receiving without validation)
Credit issues (damaged or short shipments that are not credited)
Second, for each of the core deficiencies, we facilitated process redesign workshops and system evaluations to document the ideal To-Be (future) state.
Finally, we defined a Gap Closure Project Plan to help close the gaps between the As-Is and To-Be States. This included Short-Term, Medium-Term and Long-Term projects, a detailed project plan, project charter, proposed timeline and team members/stakeholders required to complete the recommended projects.