APPROACH

To address this, we took the following approach

  • Identified key performance characteristics of SKUs (sales, customer count, regularity of sales, affinity to other SKUs and seasonality) that affect the stocking strategy
  • Classified all considered SKUs based on these characteristics and consolidated them to create a tiered structure
  • Stocked the top tiered SKUs based on demand forecasts and defined rationalization strategy for bottom tiers
  • Identified gaps in the existing stocking analysis based on these recommendations to improve future stocking strategy

KEY BENEFITS

  • 4% incremental storage slots that can be freed up by rationalization
  • Reduction in backorders and lost sales due to unavailability of stock
  • Reduction in holding cost of low performing SKUs

RESULTS

  • The analysis and recommendations helped the client understand the gaps in their current tiering and stocking analysis process.
  • The client was able to rationalize low-performing SKUs which led to additional revenue while cutting down on its holding and ancillary cost. The flexibility to stock more and newer SKUs also improved due to availability of space.
  • Customers SLAs improved because of lower backorders, faster fulfilment due to stock availability and a broader range of products.