Inventory management and optimization

For any company with a sizable stock, inventory management and inventory optimization are essential. At any moment in time, you must be able to know where a product is in your warehouse and how many items of each line you have in stock. A warehouse management system (WMS) is normally used for this purpose, but it is important to regularly check that the inventory shown in the WMS correlates with the actual stock level. This can be done by cycle counting or with a wall-to-wall count, for instance. In addition, effective inventory management enables you to determine when a product must be re-ordered or manufactured, and in which quantity.

Inventory management advice
As a consultancy, Groenewout does not supply inventory management software. However, we can help you to improve the processes surrounding warehousing and inventory management. Over the years, we have gained considerable experience of the following topics:

  • How much inventory is needed to achieve a certain service level?
  • How can logistics and marketing be aligned more closely?
  • What is the impact on the inventory if your company grows at a rate of 10% each year?
  • What is the impact on the inventory if you consolidate two warehouses?
  • What is the impact on the inventory if you shorten a supplier’s lead time?
  • How should the inventory parameters be set in the WMS / ERP system?

Just as with all of our recommendations, you receive a complete overview of pragmatic and ready-to-implement solutions for inventory management. This also includes overlaps with warehousing and production planning.

Inventory management for KLM Cityhopper
In order to give you a sense of our approach when providing advice on inventory management and inventory optimization, we are pleased to outline some of the projects we have completed. KLM Cityhopper is responsible for the technical services for its own fleet of aircraft, but the maintenance activities are outsourced. For the maintenance activities, it is necessary to keep a stock of spare parts. These vary from the basics such as nuts and bolts to larger, more specialized components. KLM Cityhopper asked us to improve a number of processes such as incorporating Key Performance Indicators (KPIs) and regular stock counts, allocating responsibilities and designing the warehouse and inventory management processes.

Inventory optimization for Forbo Flooring
Forbo Flooring is a manufacturer of high-quality floor coverings. Forbo Flooring has factories in The Netherlands, France, UK and Switzerland. For its factories in Krommenie and Coevorden, we analyzed the optimal production batch size in combination with the optimal inventory level in the factory warehouses. We did this using the What-2-Store tool, which Groenewout developed itself. This is a simulation model that enables different inventory parameter scenarios to be calculated so that the costs can be weighed up against the service level. The model also includes factors such as the build-up of stock arising from the factory shutdown in the summer.

Inventory management for UPC NL
At the request of UPC NL, our consultancy improved the inventory management of components. The inventory management project started with improving the processes. In particular, we introduced more structure into the contact and dialogue between marketing and logistics. Our next step was to develop a customized MRP tool for logistics, which translated the marketing forecast (at bill of materials or ‘BOM’ level) and the actual inventory level of components into an overview of the components that should be ordered from suppliers in the short term. The MS-Access tool started out small, but has since been extended a number of times based on user requests.

Warehousing references:

  1. KLM Cityhopper (and interview KLM)
  2. Forbo Flooring Coevorden
  3. ESI Polska

Would you like to know more about inventory management and inventory optimization? If so, please feel free to contact our expert:

Rob Wijnen

Rob Wijnen
Senior Consultant
E: wijnen@groenewout.com
T: +31 6 5438 0615

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