From Excess Inventory to Improved Working Capital

Warehouse employees review inventory while walking through storage aisles to improve inventory management and customer service.

At a glance

Our performance improvement team helped one manufacturer improve working capital, reduce excess inventory, and boost customer service.

A leading global manufacturer faced rising inventory levels and late deliveries. Crowe assessed the issues and helped implement targeted improvements to strengthen working capital, inventory turnover, and customer service.

Client

A leading global manufacturer in the motor and generator sector wanted to improve its performance and customer service.

Crowe solutions

Performance improvement services

$2 million working capital improvement

Inventory optimization work helped our client maximize working capital.

A more than $10 million inventory reduction and one-time cash flow impact

An implementation over multiple months focused on reducing overall excess and unhealthy inventory through four targeted focus areas.

Increased on-time delivery

With our help, the company aligned customer order lead-times and delivery commitments with an organizational stocking strategy.

Transformative initiatives in performance improvement

See how our team can help you maximize the profitability and performance of your business.

The challenge

The company experienced rising inventory levels along with underperforming, late deliveries to nearly all customers. Too much focus on small, low-impact customers prevented the company from delivering higher service levels to more critical customers.

Our team identified four main reasons for excess on-hand inventory:

Inadequate forecasting and sales, inventory, and operations planning (SIOP) processes
Poorly defined and managed stocking strategies
Insufficient management of procurement parameters
No guidelines for effective product life cycle management

How Crowe helped

Our team conducted an on-site, hands-on, four-week assessment to identify problems and propose value-creation activities. The assessment led to a multimonth implementation focused on reducing excess and unhealthy inventory through four targeted focus areas.

Stocking strategies

Aligned customer order lead times and delivery commitments with an organizational stocking strategy
Refined policies and procedures for customer cancellations and deferments to minimize operational disruptions
Enhanced SKU-specific safety stock and Kanban levels based on financial relevance and operational complexity

Raw material sourcing strategy and parameters

Optimized and reduced minimum order quantity burdens on purchased materials
Negotiated improved raw material lead times to lessen overall forecast reliance

Disposition workshops

Led cross-functional workshops to dispose of excess and obsolete inventory while maximizing realized value
Enacted immediate measures and product owner reviews to cancel and postpone raw material receipts, as appropriate
Developed a framework and trained internal stakeholders to conduct ongoing, routine disposition activities

Forecast accuracy

Refined and emphasized historical performance reviews and sales team accountability requirements
Adjusted forecast deletion and demand aggregation windows by product family to maximize efficiencies while minimizing inventory

The results included millions of dollars of cash flow impact and working capital improvement as well as significant improvement in inventory turnover and on-time delivery to customers. Working with the Crowe team, the company was able to:

Increase visibility into key metrics with real-time dashboards, integrated into its enterprise resource planning systems
Significantly improve customer service levels
Capture additional topline revenue
Maintain positive change through training and tools

Support on-time customer fulfillment through updated stocking strategies
Improve the raw material sourcing strategy and parameters
Mitigate excess on-hand materials through disposition workshops
Upgrade forecast accuracy, SIOP, and site-level demand-planning influences
Enhance inventory performance

Work with us

Our team offers performance improvement expertise across a variety of industries, end markets, and business maturity levels. Contact us to see how we can help your business maximize value.