Sustaining inventory improvements through a pandemic

nVentic helped an industrial manufacturing client sustain substantial 2019 gains in inventory optimization through the 2020 pandemic.

In 2019, inventories were reduced by 20% while service levels were maintained.

Ways of working were put in place to deliver sustainable performance and continuous improvement in inventory management.

Towards the end of 2019, a further net reduction potential of 15% was identified and action plans put together.

Early in 2020, however, the global pandemic created additional supply chain challenges:
  • Demand patterns changed, with a softening in sales
  • Delivery concerns arose for a number of critical suppliers
  • Production was disrupted, with stoppages in several manufacturing countries

nVentic’s analytics and consulting support helped the client to take appropriate mitigation actions without losing focus on the longer-term improvements in inventory management. Key to achieving this was balancing objectives and careful data analysis to reach the best balance:
  • As soon as the impact of the pandemic was anticipated, critical suppliers were identified and strategic additional buffers of stock planned and built where necessary
  • The net impact of the additional buffers on the overall annual target was calculated and detailed plans updated
Each site was responsible for identifying and implementing actions to achieve the targets.

Programme management was coordinated centrally, with standardised reporting. nVentic supported global steering and provided analytics, as well as supporting manufacturing sites facing particular challenges.

One of the primary challenges, especially in the early phase of the pandemic, was in establishing and maintaining transparency.

A number of supply issues were combined with a slowing in demand and it was essential to understand and prioritise the risks so that additional stock could be built where needed without losing pressure and focus on the underlying improvements planned.

nVentic carried out a number of analyses, applying statistical techniques to business data in order to provide rapid insight and focus. nVentic also worked with local teams to enable them to understand and take full advantage of the data insights provided.

While the early part of the year, especially the second quarter, was primarily concerned with preserving supply chain resilience, by mid-year the situation was clear and improvements were driven through in the second half of the year.

Compared to the initial target of 15% net reduction, 12% was delivered, with the 3% delta caused by the additional stock deliberately built to offset Coronavirus risks.

Service levels continued at their baseline high levels and no more sales were lost through lack of inventory than prior to the programme beginning in 2019. Further reductions have been planned for 2021.

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