What did the company do when being out of stock hurt their customer service levels? The obvious answer was to order more inventory.
The good news: buying more inventory provided quantity discounts. The bad news: inventory grew by 30 per cent. The worse news: despite the additional inventory, customer service levels continued to decline. With warehouses and shop floors jammed, workers couldn’t get to the inventory they needed, when they needed it. The result: cranky customers, overtime on the shop floor, a cash-flow crunch, and a need for an immediate solution.
One of Acuity’s Principal Consultants was dispatched to the plant. In less than half a day, he diagnosed the problems and determined appropriate solutions. Revised inventory practices and new order rules were quickly put into in place.
Inventory levels immediately declined at the rate of six per cent per month even as customer service improved. Further improvements were achieved through implementing changes in forecasting, planning, purchasing, and shop floor operations.