Terrasource manufactures mining equipment and parts. A significant portion of their sales are for replacement and repair parts. They were losing sales because of not having the finished goods or raw materials to meet customer leadtime requirements.
- Developed a model for classifying all finished goods inventory items based on multiple criteria to align sales, finance and operations on what should be stocked and appropriate service-levels
- Worked with Optimal Velocity to create a customized forecast model to predict demand for each SKU 9 months in the future
- Used forecast model plus what sales reps are quoting to finalize forecast
- Used forecast, forecast error and safety stock service level to calculate reorder points and reorder quantities
- Implemented Executive SI&OP to align inventory levels and supply planning with the forecast model and sales rep quote activity
- Every month, as part of the S&OP process, the company places “bets” to pre-buy inventory or supply chain capacity which resulted in a $1 million sale in the first quarter S&OP was in place
- Finished goods inventory levels are in-line with target service level percentages