Case Studies

Home > Case Studies > Inventory Cost Reduction

Inventory Cost Reduction

THE PROBLEM:

 Loss due to inventory write off and high inventory levels

BACKGROUND:

In this case, a large manufacturing company with several strategic business units had inventory-related challenges in terms of write off as well as excess inventory. This was a recurring concern every fiscal period. Inventory-related issues impacted the bottom line as well as cash flow.

THE SOLUTION :

A detailed analysis was carried out using C&E (cause and effect) matrix, FMEA (failure mode and effects analysis) and pareto analysis. Pareto analysis of write off data helped identify root causes of the same. C&E matrix gave the rating of inputs of customer importance from a CTQ (critical to quality) standpoint. C&E was carried out for material planning, purchasing and warehousing. The inputs from C&E were further explored in FMEA. In FMEA, the potential causes for failure modes and corresponding ideal controls were identified; this then formed the basis for a master action plan.

RESULT:

The successful completion of the project led to an annualized reduction of inventory write off from a baseline of 2.4% to 1.4%. There was also an inventory turns improvement of 6.4 to 10.2. The annualized saving from this project was $860 K.

Scroll to Top
  • He has personally mentored 550 individuals.
  • He has extensive practical experience and would share the cases handled in the sessions.
  • Trained by Mckinsey Consultants as a Lean Practitioner, Rock Hill-USA
  • Certified MBB in Lean and Six Sigma by SBTI, Texas.
  • He has handled on site training and consulting in global sites at Switzerland, Netherlands, Hungary, Poland, Germany, Belgium, UAE, Srilanka, Thailand, China,Japan, USA and across Indian cities.
  • His online candidates include people from Sweden, Saudi Arabia, Australia, Philippines, PNG, Denmark, Lebanon, Kenya.
  • Certified as CEO Coach by completing Post Graduate Program in Executing Coaching by CFI India.
  • Executive General Management Program, IIM Bangalore.
  • M.Tech. Quality Management from BITS Pilani.

PRADEEP KUMAR

Enroll to our Six Sigma Certification Program