Case Study

Inventory Analysis Identified $115M of Working Capital Improvement and a $22M Reduction of Inventory

Services Provided
Supply Chain Optimization
Industries Served
Automotive and Recreation

$1B revenue business that manufacturers and supplies replacement parts for the automotive aftermarket.

The Challenge

A large manufacturer of car parts required significant working capital for acquisition growth and requested support to identify and develop a future inventory model to reduce working capital as well as identify root-cause drivers of current excess inventory.

Our Approach

Through a detailed inventory analysis, we conducted the following:

  • Process mapping to understand process requirements by different departments
  • Data review of over 11M rows of transactional data history to ensure clean and accurate data analysis and modeling
  • Current-state data analysis to understand inputs and outputs of inventory as a function of demand requirements
  • Current-state data analysis including inventory and purchase order history to understand drivers of excess inventory
  • Future inventory stocking model based upon demand and supply variability to optimize inventory levels as a function of service

The Results

Through our analysis, we identified the following issues:

  • Insufficient safety stock algorithms based upon days of supply rather than demand and supply variability
  • Uncontrollable return process that results in incremental addition of excess and obsolete inventory
  • Warranty and RTS finished good returns that resulted in incremental addition of excess and obsolete inventory
  • Manual purchasing processes that resulted in inaccurate purchase quantities against historical and future demand

From there, we developed a detailed one-year implementation plan that included a project plan and risk assessment and would lead to $115M of working capital improvements and a $22M reduction of inventory.

To find out how TriVista can help you achieve similar outcomes, contact us today:

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