Description

This is an inventory management solution developed by R&G that is designed to minimize the stocking levels required to support a 98% service level for MTS products. The system uses historic data to set SKU level safety stocks. We do not do this by simply fitting a normal curve. Instead we use a model of the most commonly occurring demand patterns/protocols and develop a hybrid that best fits your data (on a SKU-by-SKU basis). The baselining almost always has a significant number of SKUs where the stock level can be decreased, but, equally important, it highlights a few stocks that need a higher inventory level. The net result is a two-pronged improvement; lower stocks AND a better service level.

Impact

Beyond the obvious advantages of lower stocks and the financial cash benefit, we have seen a significant reduction in the repetitive clerical and planning activities. MRP Requisitions and Stock Replenishment Orders are generated and distributed with a minimum of human intervention and tweaking. This frees up employees to take on more value-added tasks. Order planners are now running vendor management programs while inventory planners work with ERP systems staff to ensure accurate accounting and eliminate write-offs.

Results

  • Typically 10-30% inventory reduction on MTS stocks.
  • Service level improvements depend upon the baseline value, but the improvement is typically 20 service points (versus request).