From stock surplus to strategic control
A water utility company was seeking several operational improvements as part of a broader strategic shift. One of the findings was that the company had too much working capital tied up in inventory. With a central distribution center and over 15 regional warehouses, the company sought to strike a better balance between availability and cost - without compromising service levels.
Ambition: Lean inventory, resilient supply
The goal was clear: reduce working capital while maintaining robust material availability. Achieving this required a harmonized inventory policy across the network, improved alignment between order frequency and supply capabilities, and stronger buffers against demand volatility. As part of this effort, we also examined replenishment processes to determine the optimal balance between centralized and decentralized stocking and supply strategies. Additionally, tactical agreements were explored with suppliers to enable direct on-site deliveries, further enhancing responsiveness and operational efficiency.
How we helped: Inventory strategy powered by simulation and structure
A comprehensive simulation of stocking strategies across the warehouse network laid the foundation for change. To support this, we developed a custom simulation tool that enabled scenario analysis and data-driven decision-making. This was followed by the rollout of an inventory optimization program, which included defining min-max parameters per SKU and warehouse (safety stock, reorder point, etc). Reporting structures were documented to ensure transparency and ongoing control.
Results: Potential to free up 25% working capital, 100% more confidence
The company now operates with a harmonized inventory management policy across all locations. With min-max levels tailored to each SKU and warehouse, average stock levels will drop by 25% - freeing up capital while safeguarding product availability as per service level targets set in the inventory policy. The result: a more agile, data-driven supply chain ready for future growth.
Looking to unlock working capital and boost supply chain resilience? Contact us today to learn how we can help you.
