SLIDE 1
1
2
Agenda
- Introduction
- Motivation
- Methodology
- Model
- Results
- Takeaways
- Q&A
Internal Inventory Management: Analysis and Improvement for a CPG - - PowerPoint PPT Presentation
Internal Inventory Management: Analysis and Improvement for a CPG - - PowerPoint PPT Presentation
Internal Inventory Management: Analysis and Improvement for a CPG Company Jorge Moreno Snchez Konstantinos Lalos 1 Agenda Introduction Motivation Methodology Model Results Takeaways Q&A 2
SLIDE 2
SLIDE 3
3
Introduction
- Sponsor Company
– CPG leader enterprise – Hair care family in Mexico – Inventory management for FG at DC and RPM at production warehouse
SLIDE 4
4
Motivation
CPG Companies
- Growth requires capital investment
- Reduce working capital
- Maintain or improve service levels
- Increase flexibility
Sponsor company
- High degree of variation in the supply chain
both upstream and downstream
- Single-echelon inventory management
$$$ $$$ $$$
SLIDE 5
5
Methodology
- Data reduction
- Segmentation
– Finished Goods
- Sales value ABC & Demand variance
– Raw and Pack Materials
- Type & Criticality
- Pooling variability from final demand to upstream stages.
- Simulation and Validation data sets
SLIDE 6
6
Models
Future Forecast Master Production Schedule (MPS) Master Resource Planning
Demand Planners, Marketing & Sales
Finished Goods Stock Policy (weeks)
Existing Finished Goods Stock Levels
Purchase Orders to Suppliers Raw and Pack Materials Stock Policy (weeks)
Existing Raw and Pack materials Stock Levels Finished Goods Min, Avg, Max Raw and Pack Materials Min, Avg, Max
Demand History Forecast History Forecast Error Calcualtion Production History
Future Forecast Master Production Schedule (MPS) Master Resource Planning
Demand Planners, Marketing & Sales
Finished Goods Stock Policy (weeks)
Existing Finished Goods Stock Levels
Purchase Orders to Suppliers Raw and Pack Materials Stock Policy (weeks)
Existing Raw and Pack materials Stock Levels Finished Goods Min, Avg, Max Raw and Pack Materials Min, Avg, Max
Demand History Forecast History Forecast Error St.Dev Calcualtion Min St.Dev Demand St.Dev Calculation Risk Pooling √ σΑ
2+σΒ 2...
Currently Used Proposed
SLIDE 7
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Results
- Total 11% inventory
reduction
– Finished Goods
- Inventory reduction 8%
- Service level 95%*
– Raw and Pack materials
- Inventory reduction 13%
- Service level 97%
- 20,000
40,000 60,000 80,000 100,000 1 2 3 4 5 6 7 8 9 10 11 12 Quantity Week
Raw and Pack Material Inventory Position
ROH 2 - proposed ROH - used
- 5,000
10,000 15,000 20,000 25,000 1 2 3 4 5 6 7 8 9 10 11 12 Quantity Week
Finished Goods Inventory Position
SKU 1 - Proposed SKU 1 - Used SKU 2 - Proposed SKU 2 - Used
*same service level used for current model.
SLIDE 8
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Take away
- One model does not fit all (FG & RPM)
- Pool demand and variation directly from final demand to
upstream stages
- Build collaborative multi-echelon inventory policies and
forecasts with suppliers, manufacturers and customers based
- n the actual consumer facing demand.
SLIDE 9
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