CLIENT SITUATION & APPROACH
The client is a Global Business Unit of a key player in the chemical industry. In the context of mitigated financial results, it has decided to firm up its cash management, with a major focus on inventory (working capital) The client requested our support to help them hit the inventory reduction target defined at Corporate level (short term), and improve the teams’ maturity with regards to inventory management (long term) EFESO was working in partnership with the Global Business Unit, and the in-house Excellence Center.
The project was divided into 3 phases. EFESO supported with the first two:
- Quick-win phase: Analyze 3-years best inventory performance expressed in DOS (days of sale) for every SKU and use these as “internal benchmarks”. Based on those, ask local teams to set their targets and validate that the total target reaches the overall objective. Organize weekly follow-up meetings with the S&OP managers to track progress.
- Inventory Excellence (Phase 1): Determine target Inventory level per SKU by applying algorithms and considering various constraints (service level, production constraints…). Define the necessary “performance management” to manage to the standard.
RESULTS
During the quick-win phase: the target has been achieved and inventory has been reduced by 40 Million € over a 5 months period (a reduction from 250 M€) Teams in US, Asia and Europe have been trained in Inventory definition algorithms & methodology to calculate the optimal inventory level Created alignment within the client’s Supply Chain leadership concerning Inventory Performance Management to deploy KPIs and determine where to embed them into the existing S&OP meeting structure. In parallel, several actions were conducted to reduce SMOG (creating clarity and transparency on figures, clarifying the accountabilities…)”.
