Improving service with less inventory for global branded drinks supplier

Profile

A global branded drinks supplier with many well known brands and exceptionally strong marketing, needed to transform operational performance at their £350m UK business unit. Customer service experience was poor and out of line with commercial capabilities.

As is often the case when supply chains are not well managed, inventories were high consuming working capital, and costs were driven up by excess warehouse space and stock handling.

Goal

Having recognised the opportunity offered by supply chain excellence, capability building almost from scratch in a sales and marketing led business unit was needed. Key objectives were to:

• Improve demand planning and supply co-ordination across core business functions.
• Step-change customer order fulfilment.
• Reduce logistics costs.

Approach

To build supply chain management capability from the ground up, concepts central to our methodology had to be developed, including:

• Demand Forecasting –  the consistent generation of a reliable, data-driven, statistical forecast formed the basis to reduce bias and improve accuracy. With our support, suitable demand planning software was implemented to streamline the forecasting process and focus effort on critical planning decisions.
• Inventory Management -  with the utilisation of detailed demand analytics, the parameters for inventory management were adjusted and aligned to demand profiles. Ongoing performance reporting reflecting the balance between service, cost, and capital, provided the tools for an upskilled team. 
• Organisation – driving coherent performance measures across the business set the foundation for cross-functional working based on shared incentives.

Design and development of an integrated business planning process (sometimes called Sales & Operations Planning), created the mechanism for sustained supply chain performance improvement.

Result

An integrated business planning process was established that systematically connected demand creation and supply fulfilment activities. This was the foundation for:

• Inventory reduction of 45% 
• Order fulfilment improvement from 90% to 98%

These results within 12 months also supported a warehouse move from a 375k sq ft facility to 125k sq ft unit, significantly reducing logistics cost.

Takeaways

• Build processes from first principles. 
• Drive awareness and understanding across all business functions. 
• Leadership commitment essential to delivering change.