reducing of stock levels

For medium sized manufacturers stock levels provide approx. 10% of the circulating asset. The so tied up capital is equal to more than 5% of the annual turnover. High stock levels and high processing time tie up capital, increase process costs and reduce flexibility.

 For the following scenarios this tool would be useful:
  • stock levels aren’t transparent
  • components are often stored or transferred
  • inadequate use of systems for planning and disposition
  • up- and downstream processes aren’t integrated in planning and disposition of components
  • stock levels aren’t coordinated between production and distribution
  • no inventory management across the entire supply chain in place
If you use this tool in the right way you can achieve:
  • reducing stock levels  wile simultaneously secure material availability
  • reassurance of product planning
  • determination of responsibility for stock levels and monitoring of stock level growth
  • steering of stocks via minimum / maximum quantity
  • leading to kanban driven production – ABC / XYZ analysis
Step by step guide:
  1. business process modelling and analysis of planning and steering processes
  2. analysing of stock levels and processing times
  3. identifying of potential
  4. development of actions to reduce stock levels – e.g. revision of disposition process
  5. setup of consignment stock
  6. implementation of disposition process and system as well as integration of warehouse planning and steering
  7. realisation of fast practical measures
Our experience:

In many companies we experienced the following reasons for increased stock levels.

  • insufficient sales related planning
  • instable planning
  • processing times in production too long
  • replacement time too long
  • production capacity too low
  • machinery and processes are failure-prone
  • unfavourable production quantity
Results which clients achieved:
  • reducing of stock levels up to 30%
  • realisation of first reduction during project implementation phase