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.
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.
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.
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.