Barloworld Equipment Company (BEC), the exclusive distributor of Caterpillar heavy equipment, was looking for an inventory optimization solution that would actively manage changing business cycles.
"The high cost of carry of parts inventories had become a major problem, and we needed a rapid solution to manage this more effectively," says BEC`s Anton Fourie. "We had already managed to reduce lead times and we wanted a system that could take advantage of this and drive down inventories."
BEC subsequently implemented Ability - Inventory Optimization, a strategic inventory management solution offered by Ability, a leading developer of supply chain optimization solutions. Within nine months of the implementation, the company increased its customer service performance and reduced its parts stock holding levels by 30 percent.
The company launched nine strategic initiatives targeting areas within BEC that were identified as having the most potential to improve customer service, and to contribute to better profits for both parties. One of these strategic initiatives is to optimize the parts operation.
Although automated inventory optimization has been a part of BEC`s logistics management for more than 10 years, the company believed that a "stock to forecast" inventory management system would be able to further optimize inventories, even in BEC`s changing marketplace. Ability was set the task of implementing the latest supply chain management best practices for reducing investment in inventory while protecting and improving the company`s customer service levels.
"Because the market is changing rapidly, businesses want to buy inventory according to what they are going to need, instead of what they have needed historically - which inevitably leads to an over-stock situation," notes Fourie.
Although BEC has more than 50 stock locations around the country, the entire stock control system is run and managed from a central location by one person who is responsible for ordering all new stock. The company has a daily inventory-ordering review period that covers around 350 000 lines of stock. By using Ability to ensure that only the correct parts are purchased and that surplus inventories are identified for re-distribution, BEC has so far reduced overall inventory value by 30 percent.
"Along with a decrease in inventory holdings, we have also observed an increase in service levels," says Fourie. "Total customer service levels of stocked lines are above 90 percent, while our fastest moving lines have a 95 percent service level"
"The total effect of the inventory optimization system, in terms of bottom-line savings and simultaneous improved customer satisfaction levels, means that BEC has more than covered the cost of implementing Ability in the first six months of use," concludes Fourie.
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Ability Solutions, a subsidiary company of JSE-listed Ixchange, is a leading provider of supply chain optimization solutions. We help companies accelerate their profitability by providing specialist solutions that address the dynamic needs of businesses in the New Economy. Ability`s flexible, scaleable and robust solutions address the complex problems distributors face as they seek to drive profitable growth. Ability`s solution set includes the Ability - eCommerce Fulfillment, Ability - Inventory Optimization and Ability - Financial Management solutions.
Ability provides targeted solutions intended to guarantee its customers` ability to realize a rapid return on investment as a result of streamlining their supply chain process, improving their operational efficiencies, effectively managing their suppliers and increasing customer satisfaction. Ability has offices worldwide, with headquarters in Atlanta, GA., USA.
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