Inventory Management Case Study

Focus on the essential articles, reduce costs, and identify poorly selling items.

The Challenge

E-commerce wants to review its inventory policy and redefine the level of stocks.

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The Journey

A step-by-step way from a high level of stocks to optimal level policy.



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The Solution

By combining ABC and XYZ analysis, total stock level has been lowered by 24%.

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Benefits

Focus on the most important articles, reduced costs, identified poorly selling items.

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Supply Chain Apps Case Study: Inventory Management

The Challenge

E-commerce is using the ABC analysis to define stock levels, as a quick and easy evaluation of all goods in the warehouse. For each of the categories, the company is using different inventory policies.

Not considering the different patterns of demand, at the end of the year company has a high level of stocks.

The company would like to redefine inventory policies and get rid of the articles with unpredictable demand that don’t bring high revenue.

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Supply Chain Apps Case Study: Inventory Management

The Journey

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Supply Chain Apps Case Study: Inventory Management

The Solution

First, we separated articles into three categories based on ABC analysis to represent the current situation, based on which inventory policies have been made.

We added fluctuation of demand to the inventory classification process. With ABC XYZ analysis we got nine categories of articles. All articles from the CZ category will be put on a flash sale and removed from the assortment. This is the practice that the company will do on a yearly basis.

Next, we simulated multiple different inventory policies for each article in the AX category, as the most important one. The same is done for the rest of the categories and an optimal policy per each article is established. With that, predicted total stocks at the end of the next year will be lowered by 24%.

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Supply Chain Apps Case Study: Inventory Management

Benefits

Focus on the most important articles.

Reduced monitoring costs.

More informed ordering and stocking decisions by adding another level of insights to the inventory classification process.

Identified the entire group or category of goods from the assortment, that is selling poorly.

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