As an example of what happens as a result of improved operations strategy, I’d like to share the following case study. To download a printable version and read other case studies, please visit my website.
Situation:
A middle market distributor of construction supplies and materials used centralized purchasing to support their network of branches. The branches regularly ran out of stock, causing losses of 10 to 20% of total sales. In addition to solving the stock shortage problem, company management wanted to improve customer service, revenue, inventory turns, profitability, and cash flow.
Solutions:
We launched a comprehensive change management effort including better sales forecasting, use of a distribution center, and improved materials management throughout the interstate network of branches. Specific product ramp-up and ramp-down methodologies for new products helped establish proper inventory levels.
A new team-oriented structure established clearly defined roles, responsibilities and accountabilities throughout the purchasing and operations areas and allowed for partnerships between the branches and central offices.
Results:
The company is meeting or exceeded their goals, and things are still improving. They accomplished the following:
- Increased revenue by 5 to 10%
- Improved inventory turns from 2.8 to 10
- Improved gross profit margin by 10%
- Reduced obsolete inventory by 75%
© Rick Pay, 2011-2012. All Rights Reserved.
