Purchasing and Inventory Management Process Improvements for a Paper Products Distributor
REM Associates of Princeton, Inc. completed an assessment of procurement and inventory management activities and assisted with the implementation of process improvements for a major East Coast paper products distributor. Objectives were to:
- Reduce inventory investment
- Improve service to customers
- Provide time for Buyers to perform process maintenance
Results of this work:
This work resulted in:
- An increase in turns from 10.0 to 15.0 for “A” items; inventory reduction of 33%
- An increase in turns from 8.0 to 11.0 for all items; inventory reduction of 27%
- Fewer stock-outs on “C” items; less time needed for Buyers to expedite stock-out items
Existing Situation:
Prior to the implementation of our process improvement recommendations:
- Total inventory turned 8 times a year
- Buyers reviewed every item and every vendor every week; no vendor or item segmentation
- There were no varied-interval vendor review schedules
- Buyers performed many manual calculations
- Buyers ordered small quantities of low volume items frequently resulting in numerous stock-outs and a disproportionate amount of time spent expediting purchases
- Buyers had no time to manage purchasing and inventory parameters
- Little vendor or item rationalization and consolidation
Rx for success:
Following an in-depth analysis, the following process improvements were implemented:
- Segmented vendors and items; focused on “A” vendors and items
- Developed and implemented a varied-interval vendor review schedule
- Kept “time” parameters current (Review Intervals, Lead Times, Safety Times)
- Reviewed and adjusted item sales forecast during reorder process for obvious outliers
- Modified reorder reports to eliminate manual calculations
- Vendor and item rationalization and consolidation process developed and implemented
If your current environment in any way resembles the “Existing Situation”, contact REM Associates to develop an action plan for process improvements directed at achieving similar results.