Revamping inventory management ecosystem to maximize sustainable gains

To retail companies, inventory management remains core to the whole operation. In the past few years, the mindset to reduce operational costs has been increasing, which has led companies to create numerous improvement initiatives.

In a recurrent and sometimes suboptimal quest for improvement, processes and methodologies tend to be reshaped either to focus on a specific case or to be overly dependent on some process owners.

Facing this scenario, the main goal of this project was to develop new analytical methodologies that contribute to improving efficiency while safeguarding the required standardization.

Throughout a long-term partnership with the client’s internal teams, we conducted several transformational changes that led to important operational benefits. The project approach was grounded in three core pillars:

• Methodology Improvement – Upstream and downstream inventory processes were developed to aim for standardization and improvement while ensuring the effective handling of each business-specific requirement.
• Results Monitoring – All the developed methodologies were pilot-tested, allowing the fine-tuning of the models and confirming the initially estimated benefits. This also increased the company’s monitoring culture.
• People Empowerment – The developed processes were internalized by the operational teams (headquarters and stores) due to extensive training sessions.

Due to these structural improvements in the inventory management processes, it was possible to increase the overall efficiency of the supply chain through a reduction in stock coverage (8% at store level and 14% at the warehouse level) while increasing service level (19% on warehouse operation).

Moreover, the numerous initiatives led by the project across the whole supply chain went from upstream to downstream processes, and from FMCG to Textile and Health & Wellness business units, including national and international procurement processes, leveraging standardization throughout the company.