Challenge:
A manufacturer was grappling with a bullwhip effect caused by pandemic-driven fluctuations in demand. Overproduction led to a full warehouse of slow-selling inventory and significant cash tied up in the extra stock. Aiming to regain control, they sought a data-driven forecasting solution to align production with customer demand more accurately. Through a connection with Work Excellence, they were introduced to our Work Excellence Business Analyst team, using Power BI as a dynamic, low-cost solution to address these challenges.
Approach:
Understanding the need for a quick turnaround, we proposed a custom Power BI tool to provide real-time forecasting capabilities. The client chose not to rely on their historical data, which was skewed by inconsistent buyer behavior, and instead opted for customer data to drive forecasting accuracy. We deployed our Analyst Team, which included:
– Operationalizing the model and integrating it into the client’s regular business cadences to ensure long-term usability and success.
– Defining clear project phases and roles to ensure alignment across teams. We clarified the data, equations, and conceptualized the final solution.
– Applying the PDCA cycle (Plan-Do-Check-Adjust) to iteratively build, test, and refine the forecasting model based on evolving needs.
Solution:
We customized a Power BI solution that allowed the manufacturer to:
01.
Track demand and adjust orders based on customer-driven data.
02.
Gain visibility into inventory needs and reduce unnecessary stock.
03.
Manage the forecasting and ordering processes efficiently without needing to pull in additional resources.
By iterating the model and addressing evolving needs, we enabled the client to shift from reactive to proactive inventory management, effectively stabilizing their supply chain.
Results: Our collaboration delivered tangible results
50% Reduction in Weeks of Supply: Inventory was cut in half, freeing up cash flow and reducing warehousing costs, which greatly benefited inventory costs.
$12 Million in Cost Avoidance: By optimizing inventory, the client avoided the need to open a second warehouse, which would’ve cost $12 million.
Improved Decision-Making: Increased visibility empowered the team to have strategic conversations and make informed adjustments.
Operational Independence: With the tool handed over, the client’s team now manages the system independently, expanding and scaling it as needed.
Enhanced Customer Relationships: Better forecasting strengthened customer partnerships, fostering trust and improved product offerings.