The Client:
The client is a leading food and beverage distributor that services 20 states in the south/southeast regions of the U.S. The client’s food business unit is a complete broad line distributor that delivers produce, dairy, meat/poultry/seafood, grocery, and frozen foods. For this engagement, Jabian partnered directly with the EVP and the SVP of Purchasing and Logistics.
The Challenge:
Like many businesses in other industries, the client’s supply chain had accumulated excess inventory and on-order product to meet the once-waning, then-surging demand in the years following the COVID-19 pandemic. This, coupled with a strong customer-first mindset, resulted in the following challenges:
- Inventory levels that were too high due to an over-focus on stockout risk
- SKU proliferation that complicated the planning process and further drove high inventory
- Fixed capital constraints creating an unnecessary feeling of urgency around investment decisions
- Dated legacy tools that would not support the purchasing process after an impending ERP implementation
The Strategy:
Jabian partnered with the client’s central and divisional purchasing leadership to assess the magnitude of the opportunity, identify specific improvements to be made, and create a roadmap of improvements to be executed by the client throughout 2024 and beyond. The following key activities were included in Jabian’s approach:
- Performed a line-item-level analysis to establish inventory targets for specific SKUs
- Utilized AI-based language models to prioritize SKU rationalization opportunities for roughly 10% of SKUs
- Developed a three-tiered roadmap that prioritized high-value SKUs for inventory reduction
- Executed the main recommendations with the leadership team and developed a management plan to ensure improvements would be maintained going forward
INVENTORY OPTIMIZATION SUMMARY
ROADMAP
The Outcome:
Over the course of 12 months of total engagement with the client, Jabian accomplished the following:
- Reduced inventory levels by $35M
- Drove a 50% increase in user adoption of planning software
- Improved customer service levels by 0.5%
- Ensured the optimization efforts would be sustained by the leadership team in the years to come