Introduction and challenges
The reduction of inventory and physical work-in-progress remains a significant economic performance challenge for companies to maximise cash flow. In addition to its impact on working capital requirements and cash flow, inventory reduction also leads to a reduction in multiple costs: transport, inventory holding (warehousing, security, inventory) and even depreciation or destruction of obsolete inventory (product configuration exceeded, life expectancy remaining insufficient, etc.). However, companies face several challenges in achieving a sustainable reduction in inventory, including increasing demands in terms of customer service, unreliability of forecasts, and difficulty securing supplies.
To address inventory reduction in a sustainable way, companies need to make significant changes in terms of processes, governance, performance management and culture.
How we can help
With expertise in inventory reduction and business transformation, Argon & Co supports its clients in obtaining sustainable results:
- Diagnosis to quickly identify the stock reduction drivers of the current model (business processes and practices, performance management, IT systems, organisation and skills, etc.)
- Target inventory level via our “normative” approach allowing us to model the different components of the target stock (safety stock, campaign stock, anticipation stock, stock in progress)
- Leveraging inventory sizing models that help teams size and adapt the inventory levels to the right targets for their businesses
- Definition of target business practices: a review of processes impacting stock levels (stock management, forecasts), associated management rules such as safety stock dimensioning
- Implementation of inventory management systems, with transparent governance and performance reviews powered by analytics and inventory monitoring and planning dashboards.