Roberthalf.co.uk | Contact us

Inventory Business Process Improvement

Business situation

As the production of manufacturing units increased, our client identified issues with their inventory capacities, processes and procedures. Due to a lack of internal resources and appropriate skill sets to address the streamlining of inventory processes, the company contacted Robert Half Management Resources.

Project scope

The team of interim managers worked with the client on a four phase project to arrive at a solution:

• Phase 1: Identification, Documentation and Resolution of Inventory Transactions – First, the project team worked to identify inventory charge-offs and variances causing gross margin to fluctuate + or -1.5 percent. The project team wrote queries in IBM’s AS400, transferring daily transactions into Excel so they could identify and summarise the data in tables.
• Phase 2: Review and Refinement of Inventory Processes and Procedures – The project team then reviewed inventory cycle count procedures in light of the write-off charges identified in Phase 1 and discovered deficiencies that were resulting in mis-statement of inventory and inaccurate gross margins.
• Phase 3: Documentation of Business Decision Rules – The interim managers documented the business decision rules established during implementation of the distribution software. They discovered that a routine practice – one of overriding internal system checks and balances used to match shipments to purchase orders – was causing huge variances.
• Phase 4: Development and Implementation of Recommendations – In the last phase, our project team presented recommendations to the executive management team outlining: Changes to purchase order entry procedures. A restructuring of the warehouse operations office. An increased focus on inventory cycle counts. The project team then implemented these changes in concert with client personnel, providing immediate feedback to manufacturing units about price and weight variances and segregating variances for reporting in a more timely fashion.

Industry: Distribution

Revenue: £125 million

Client's return on investment

The project resulted in streamlined processes and a highly functional inventory system. Inventory charge offs and variances were reduced dramatically. The reorganisation of the warehouse operations office enabled the company to increase sales volume by 25 percent without increasing the number of staff. By using the processes our team developed and implemented, our client was able to put off their buying decision on new warehouse management software for two years. Through the design and implementation of screen level edit controls, timely detection of input errors resulted in more than £140,000 in annual savings. The daily monitoring of billing procedures and inventory adjustments achieved additional savings of approximately £400,000 annually.

---