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Case Studies

Supply Chain & Operations

Inventory optimization in a Make-to-Order environment for a mobile equipment manufacturer

A tier 1 mobile equipment manufacturer needed inventory optimization. Applied Value built an inventory projection tool and defined a budgeting process that resulted in reduced inventory costs of 20 MUSD (39%).

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Situation

A tier 1 supplier of mobile equipment needed assistance in inventory optimization. Applied Value was tasked with performing a bottom-up analysis of raw materials, semi-finished and finished goods, aftermarket business, and inventory drivers to identify cost reduction opportunities. The client also asked Applied Value to develop an inventory projection tool and define an updated inventory budgeting process.

Approach

Applied Value assessed the situation through quantitative and qualitative analysis to understand status quo ways-of-working that affected inventory levels. To develop the inventory projection tool, AV conducted analysis of inventory performance by stock-keeping unit (SKU), optimal safety stocks, lot size minimum-order quantity (MOQ), and lead-time reduction possibilities. Lastly, AV developed a summarized list of opportunities for inventory improvement along with implementation plans. 

Results

Applied Value built an inventory projection tool and defined a new budgeting process, which reduced inventory costs equal to 20 MUSD (39%).  AV supported the execution of inventory changes with an actionable list of the largest opportunities that directly supported the organization’s objectives. 

39%

inventory reduction

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