Manufacturing & Distribution

Issue

A leading manufacturer and distributor of products used in North American public infrastructure, nonresidential and residential construction industries experienced a dramatic volume downturn due to the recession (2007 – 2009). Finished goods inventory levels had skyrocketed and represented a major opportunity to reduce costs. The Highland Group was hired to reduce current inventory levels and create and implement volume forecasting and planning processes and tools to better manage production. The client also requested a management system to maximize the benefits of the new processes and tools.

Highland Approach

The Highland Group analyzed sales history by month to understand sales trends by family, item, seasonality and location, created data models and then established rules and cost-effective inventory levels for each family group. The team also formalized and documented forecasting, demand planning, customer service and inventory policies.

Actions Taken

• Established an inventory requirement forecasting process.
• Formalized an inventory and customer service policy setting decision process.
• Developed a sales forecast model with both historical and market input with the mechanics to measure actual results.
• Developed a consolidated sales history, pending and forecast data model.
• Formalized the sales demand management decision process.
• Brought together inventory planning and sales forecasting to create/upgrade the demand planning MATRIX tool.
• Implemented a pilot process and established metrics for service level performance and cost.
• Trained demand planning process stakeholders.
• Established service and inventory policies and levels.
• Implemented a System For Managing to link all levels of the organization to the high-level Driver Goals, track key metrics and engage everyone in the company’s pursuit of process excellence.