One Strategy to transform inventory turns and supply risk within weeks!

Introduction

Is your organization equipped with readily available data and simple practices, yet not fully capitalizing on the opportunity to enhance its supply chain performance? Each edition of this newsletter presents a new strategy that you can implement immediately, allowing you to see tangible results within weeks.

Strategy

Leverage blanket purchase orders and stocking agreements with your suppliers to yield substantial benefits for your organization, including improved financial performance and supply risk reduction.

Client Case Study

Gap Discovery

·???????? Held 8 months’ worth of inventory for a key material category.

·???????? Buyers were planning inventory using very different lead times from actual lead times.

·???????? Supplier lead times varied completely depending upon whether necessary components were in stock.

·???????? No understanding of material demand volatility caused by production plan.

·???????? These uncertainties caused buyers to dramatically over purchase to buffer against worst case scenarios.

Escalate Transformation

·???????? Analysis of actual demand showed that production for their flagship product was very stable, so material safety stocks did not need to exceed 2 weeks’ demand.

·???????? Suppliers were completely agreeable to maintain stock and deliver weekly, since they were all local.

·???????? With a blanket purchase order, suppliers were willing to pre-order components to minimize risk of longer lead times.

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Conclusion

·???????? Inventory and lead times reduced from months to days.

·???????? Annual blanket purchase order provides supplier stability and assurance to purchase components and reduce their costs and reduce unit prices to the client.

·???????? Supplier to maintain minimum 4 weeks inventory and deliver weekly.