Solution: Inventory Optimization
Clients:
A manufacturer of metal components, specializing in machining, turning, and welding services.
A Brazilian leading manufacturer of electronic controllers for diverse industrial applications.
The Challenge
Deciding when and how much to order of each material to meet production demands might seem easy.
However, if the goal is to keep inventory levels as low as possible while minimizing the risks of a stockout, this task becomes extremely challenging, even for the most experienced professionals.
Aside from the large number of items (in the hundreds for both clients in this case), what further complicates good inventory replenishment decisions are the uncertainties of demand and lead time.
The Objective
To safely reduce raw material inventory levels and free up working capital.
The Solution
A customized and integrated version of our inventory optimization solution, Mip Stock, including simulation support for making strategic decisions, such as choosing the optimal transport mode for international purchases.
Results
For the electronic controller producer, the simulation already shows reductions in inventory levels between 15 and 25%. The company is planning to use the capital released from inventory to invest in the construction of a new production facility.
For the automotive supplier, inventory level reductions are around 15% and the frequent stockouts they used to have are expected to almost disappear. With more predictable and shorter lead times, the company wishes to re-negotiate contracts and increase prices for its clients.