Case Study – Warehouse/Inventory Management

Tier 2 Automotive Components Manufacturer

Michigan Complex
Heavy Machining/Assembly

  • 1.2M Sq Ft Mfg. Space
  • 600+ Associates
  • $6M Annual Indirect Spend

WHAT

Complete Outsourced Third-Party Indirect Program

HOW

The majority of this client’s operations have been acquisitions from other failing component manufacturers over the years. As a result of this de-centralized approach, ValuePoint’s client performed its own crib management, indirect inventory management, and MRO purchasing activities locally at the plant where we were contracted for our services. With a priority on manufacturing, resources and focus were regularly pulled away from indirect needs.

As a result, the inventory was over 60% inactive, obsolete, or excess, there were regular material availability issues (over 32% inventory inaccuracy rate) and inventory losses were very high. ValuePoint implemented a Crib Management program utilizing our Leadership and processes teamed with the clients Associates, combined it with new inventory management software and ValuePoint’s procurement capabilities over a 90 day implementation window.

RESULTS

Over the 9 months following implementation, indirect stock out rates dropped below 7% while at the same time inventory levels were reduced by some 16%. The crib was physically inventoried, cleaned and rearranged for effective management, and point of use stations and vending machines were implemented on the plant floor for high turn items thereby reducing maintenance and manufacturing travel times to obtain materials.

Utilizing agreed upon rules for defining cost savings, the labor and fees associated with the program were paid for by cost reduction initiatives identified and executed by ValuePoint as well as provided an additional 3% ROI on that cost annually towards the plants bottom line.

Some 9 years later, ValuePoint continued to offset the cost of the program 100% via material savings initiatives, the booked inventory value is 40% of what it was at the program's onset ($4M reduction), and inventory accuracy is above 98% with minimal losses.