The situation:

Our client, a globally operating company, experienced difficulties in managing and budgeting the inventory. Standard software cannot be used to forecast the benefits of optimization programs. It was very time-consuming for our client to run inventory optimization scenarios and any miscalculations would lock up capital in a double-digit million range. In the past cancelled orders had forced out client to perform many calculations and updates manually.

Our services:

tivona partners assessed the company’s production facilities in Germany, the US and Canada and subsequently developed a program to optimize the inventory. Our team determined the size of the inventory by focusing on the two hundred most popular parts and created an integrated value-build-up-curve model. In combination with estimates about the volume of future orders this model can be used to issue forecasts. From now on our client will be able to calculate the effects any changes might have on the inventory and can make effective business decisions. Bearing the best practice scenario in mind, cycle times were carefully optimized and the growth curve was adjusted. Monthly budget and actual comparisons of the inventory completed tivona partners’ investigation.

Benefits for the client:

The inventory in all three countries was reduced significantly – without, however, increasing risk factors – and our client’s savings total to more than € 300 million. With the help of tivona partners’ tested methodology inventory levels and buffer stock could be reduced to a minimum. Cycle times were reduced and capital allocation optimized. User-friendly IT tools facilitate a more efficient controlling and better planning (forecast, actual and budget). Cycle times will shorten significantly and our client is better equipped to meet delivery dates.