The challenge
A global distribution company wanted help to optimise their inventory warehouse process and cost to company. The company had the following specific challenges that required improvement:
- Large WIP investment in parts division that impacted cashflow negatively.
- High level of inventory obsolescence resulting in significant financial losses.
- Long lead-times resulting in waiting for parts and in turn poor customer service.
- The large infrastructure footprint with 16 branches throughout South Africa and >400 employees, created an expensive construct.
The journey
We performed an in depth analysis of the inventory state, with the objective to identify:
- Critical parts required on site real time; and
- Parts that can be supplied from central support model.
Based on the results from the inventory deep dive, we designed a new parts distribution support model and negotiated updated agreements with specialised part distributors.
The result
The new parts distribution support model with the updated distributors agreements, resulted in:
- Parts inventory reduced from ZAR70m to ZAR1m (approx. UK £3m to UK £200k);
- Parts inventory reduced from ZAR70m to ZAR1m (approx. UK £3m to UK £200k);
- Parts availability increased more than 100%;
- Inventory obsolescence risk removed completely; and
- “Through-put” and productivity increase by more than 100% with much better customer service.
STICS Limited 