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Revolutionizing Inventory Managament: LETSI
The Highlights
The consumer products company faced challenges with global inventories and SKU turnover, leading to non-performing inventory and unsustainable reduction efforts. Clear leadership declarations initiated a solution process, dismantling business silos and introducing the Learning to See Inventory (LETSI) tool. LETSI facilitated a 10% reduction in finished goods inventory without compromising service levels. Similar cost reductions were achieved in raw and packaging materials. LETSI’s widespread adoption across the organization, complemented by its integration into SAP Business Warehouse, ensured its permanent embedding, effectively addressing systemic issues.
The Headlines
10% Reduction: in Finished Goods inventory without compromising service levels
The Details
Situation
A consumer products company faced consistent global inventories with significant variation across businesses and supply chains. High SKU turnover and differing success rates of new SKUs contributed to non-performing inventory. Previous reduction efforts faltered due to “just in case” inventory decisions.
Problem
- Significant SKU turnover
- Efforts to reduce inventory were not sustained
- No visible business metric for all
- Business operating in silos
Solution
To address systemic issues, clear leadership declarations established corporate and business unit goals. Business silos were dismantled while exploring effective tools. The Learning to See Inventory (LETSI) tool emerged, known for its simplicity and visibility. LETSI, a graphical display of inventory by SKU, enabled planners to identify dead stock and make adjustments without creating service risks. Up to 10% of inventory was found to be dead stock, largely eliminated through LETSI interventions. Its integration into SAP Business Warehouse facilitated global accessibility, embedding LETSI capability permanently into the organization.
Benefit
- 10% reduction in finished goods inventory
- Service levels uncompromised
- Similar cost reductions in raw and pack materials
- Widespread adoption of LETSI across the total business
Results
The implementation of the Learning to See Inventory (LETSI) tool has revolutionized inventory management for the consumer products company. By providing a clear, graphical display of inventory, LETSI enabled planners to make informed decisions, reducing non-performing inventory without compromising service levels. This approach not only addressed systemic issues but also fostered a culture of collaboration by dismantling business silos. The integration of LETSI into SAP Business Warehouse ensured its long-term sustainability and accessibility, embedding a powerful capability within the organization. This transformation underscores the importance of innovative tools and leadership in achieving efficient and effective inventory management.
