Partnered with a leading consumer goods company to rapidly reduce inventory and implement a global S&OP (Sales & Operations Planning) process

A large consumer goods retailer who recently completed a successful manufacturing transition to China, from its US headquarters, faced the reality of managing a global supply chain in a fast moving, on-demand market.  Despite a fundamental overhaul of its product line, an expanding direct-to-consumer business, a lead position in the fast growing Asian market, and a successful manufacturing deployment, they quickly faced a growing inventory management and demand forecasting challenge that threatened to stall the growth and prosperity of the company.  They sought Archstone’s help set target global inventory levels per item and implement a Sales & Operations Planning (S&OP) process to manage ongoing cross-functional collaboration and decision making across the global business units.

The Client
A large consumer goods company with retail, distribution, and direct-to-consumer sales channels.

The Challenge
Quickly assess and understand the drivers behind the growth in inventory and set a near term plan to reduce and rebalance global inventories.  Implement a S&OP process to manage these and other supply chain challenges going forward. 

The Solution
To address these issues the team began by first deploying an analytical approach for developing and dynamically resetting the inventory targets. This helped to continuously establish the baseline for what the inventory levels should be and quickly identified products which were over target inventory levels.  The team then developed and built a PC-based model to drive the creation and maintenance of the targets - the target setting logic was built on a well established model for effective consumer goods inventory management.
Next the team tackled the need for a dynamic process to consistently balance demand and supply on a monthly basis. Here the team implemented a company-wide S&OP which was designed to ensure that once per month the right facts and the right people came together in a structured forum to make informed business decisions about what to manufacture, procure and inventory.

The Results
Within a few months the team quickly began to see the fruits of their labor - inventory began to decrease and their high customer levels remained the same or increased.  The S&OP process helped ensure inventory goals were highly visible and well understood, increased cross-functional collaboration, and helped to drive customer service levels higher due to better alignment between sales and operations.
Inventory levels trended downward throughout the first year of implementation and delivered close to 17% in balance sheet inventory savings year over year, an exceptional achievement that was applauded by the executive team and board of directors.

Contact Us
Archstone Consulting Operations Practice