What is Included and How Does the Assessment Reduce Costs?

What is Included and How Does the Assessment Reduce Costs?

Quantify the Excess Cost Opportunity

Using our proprietary tools, we can tell how much excess cost your company is carrying in excess inventory, lost sales, etc. We can determine what cost and net income impacts can be expected by implementing the recommended improvements. This is a high level ROI estimate that we calculate in a few hours using your information.

The subsequent activities determine the specific actions that are needed to deliver the expected cost savings. We use the low hanging fruit method to identify and fix the easiest problems first. These are issues that are easy and inexpensive to fix, but have the highest value return.

Interviews and Summary Presentation

Key employee input provides great insight to the front-line and core problems. We perform a high-level interview with key business employees and executives. We then circle back for second interviews where necessary to resolve any discrepancies or gaps identified in the initial round of interviews.  Interview summaries are documented and provided as part of the final deliverable.

Demand Forecast

Using our own state of the art statistical forecast application, we reforecast your historic order and shipment demand with advanced algorithms and model fitting to validate your current forecasting capabilities and performance. Our objective is to determine if a vanilla system can forecast your demands better than you have historically forecasted. We evaluate your item and location aggregations for top-down or bottom-up forecast allocation approaches. We also look at any possible regression analysis that could help improve your forecast accuracy.

We will recommend and quantify appropriate enhancements to your forecasting approach and methodology that would significantly improve your forecast accuracy and entire supply chain: stock levels, and service levels.

Inventory Analysis

We perform a thorough inventory analysis looking at current, historic and projected stock levels, ordering patterns, minimum order quantities, volume discounts, pricing, stocking and shipping policies. We also review your current ordering system and procedures for best practices and optimal performance.

We typically identify several tactical (immediate fix item reports), and strategic opportunities. We produce up to 20 separate tactical inventory reports that allow you to immediately begin to fix your inventory problems and uncover root problems in purchasing/replenishment/ordering that can permanently fix your inventory problems. Typical tactical inventory deliverables include the following reports which detail top/bottom 50 to 100 problem items/SKU’s per area.

• Excess Inventory List – Where can you reduce inventory, and exactly how much to reduce without affecting service.
• Short Inventory List – Items that are consistently out and may be causing missed sales opportunities Minimum Order Qty – Items where the current minimum order quantity causes excess stock. Use this list to revisit minimum orders and discount pricing offset with vendors.
• Core SKU List – List of the critical products you need to stock, and optimal inventory levels needed to maintain stock & sales
• ABCD ranking – We will review your current ABC ranking and recommend changes if appropriate.
• Others as needed.

Recommendations

The final deliverable for the Operations Assessment includes the array of Tactical Inventory reports and detailed analysis of quantitative and qualitative work performed for system, process and technology changes that would improve your efficiency and reduce costs. These reports and presentation provide a roadmap for items that can be immediately fixed, and also more strategic fixes that can be planned and implemented in the following 3-6 months.

Recommendations are stratified and ranked:

1. Stop the Bleeding – Tactical recommendations critical for immediate improvements
2. Foundational – Improvements needed to ensure continuation of improvements
3. Strategic – Enhancements that align your business with best business practices