This international retailer was struggling with high levels of inventory in stores and central depots, but in the wrong mix for the rate of sales. Its inability to coordinate the flow of goods from long lead time suppliers to stores was causing repeated air-frighting to cover shortages. Yet working capital was above target.
The SupplyVue analytics tool was used to capture transactional demand and inventory data. SupplyVue was able to analyse the demand profiles of the product portfolio, identifying base demand and promotional demand separately. Additionally SupplyVue analysed the supply chain performance, processes and parameters settings by segment to investigate the root cause of the air-freight requirement.
Demand was not segmented despite obvious differences between Fashion and Steady items
No differentiated replenishment policy based on segment
Reliance on freight to alleviate stock issues
No forecasting despite forecastable demand at regional level for "Steady items"
Rebalancing of inventory in the network to improve availability
20% reduction in overall inventory
Virtual elimination of air-freight caused by inventory shortages
Management capability to manage the air-freight decisions