Business Analytics the way we do it
Inventory Optimization
Capgemini Analytics
We can help you
optimize inventory
levels across the
value chain while
consistently meeting
customer demand
and service levels.
By adopting techniques like dynamic safety stock, and reviewing replenishment
order sizes, you can achieve the optimum inventory levels while still maintaining the
desired service levels.
Capgeminis Inventory Optimization analytics helps you identify and monitor key
indicators like stock churn, inventory costs and obsolescence for your inventory
across the value chain.
Challenges in Inventory Optimization
Inadequate reviews of inventory levels, safety stock and replenishment policies lead
to recurrent stock-outs or excess inventory across the supply chain. Organizations
choose to keep inventory levels high as a buffer against uncertainties, resulting in
inefficiencies and high working capital requirements.
Key Deliverables
Our Approach
We start by understanding your transaction data, replenishment and
inventory policies.
We understand the business footprint and validate key business figures.
We optimize inventory levels across locations by setting the right safety stock levels
for both finished goods and raw materials. This improves downstream service levels
and reduces loss of sales.
As part of our stock optimization analysis, we look into slow-moving and obsolete
inventory, ensuring better planning and allocation. Reducing inventory levels also
frees up capital that can be re-deployed.
We help perform the analysis for optimal lot sizes. We support supplier rationalization
analysis and also evaluate vendor-managed inventory. Periodic reviews of supplier
policies help reduce raw material inventory. Ongoing analysis and customized KPI
dashboard reports improve cross-functional visibility and reduce impulsive ordering.
Capgeminis supply chain
analytics provides you with
all the analysis and insights
you need for end-to-end
inventory optimization:
Reduce inventory and
release cash
Improve fill rates and
deliver growth
Eliminate wastages and
improve margins
Client
In sum, our analysis enables you to identify opportunities to reduce overall inventory
costs.
POS Stock and
Location Data
Service Level
Targets
Production
Data
FG Batch
Stock Data
Changeover
Cost Information
Sales vs
Forecast Data
Stock
Snapshots
Capgemini
Project
Scoping
Data Gathering
and Cleaning
Analyze
Evaluate
Insights
Capgemini
Initial Implementation / Refresh
DELIVERY PLATFORM
Global Analytics Organization
Tools & Process
Analytics Center of Excellence
DELIVERABLES
Reduce Inventory and Release Cash
Improve Fill Rates and Deliver Growth
Eliminate Wastages and Improve
Margins
Success Story
Success Story
The worlds number one CPG company identified an
opportunity to rationalize its product portfolio for a particular
product category. Inventory analysis showed that by doing so,
it could reduce both planning complexity and inventory levels
A leading CPG company was looking for cost savings from
making better capex allocation decisions about POS assets. It
was spending 10% of sales on such assets, and close to 30%
of them was non-performing with poor inventory movement.
The company faced the challenge of reducing mismatches in
asset levels and increasing POS throughput
Opportunity Identified for Rationalizing Inventory by
CPG Major
Solution
Capgeminis business analytics service team identified
slow moving and non perfor ming SKUs based on
volumes, margins and inventory days of cover. The solution
encompassed the below activities:
Identification of slow moving SKUs in the existing portfolio
and the days of cover
Analysis of gross margins and net sales for all the SKUs
Rationalizing 60% of the SKUs to simplify planning
processes.
ABC Analysis of SKUs
260,755
129
20,405
100%
15.5%
7.8%
9.3%
7.0%
64.7%
53.8%
16.3%
16.2%
3.9%
0.9%
9.9%
4.4%
5%
Turonver
16.1%
4.8%
60%
11%
SKUs
SKUs by Turnover Contribution
90-95%
Predictive modeling techniques help us deliver
dynamic models to forecast product demand.
39.2 Days
We also use customer optimization tools to model complex
operational problems that may have multiple constraints, and
find an appropriate strategy.
63.6 Days
A user-friendly, in-house proprietary supply chain simulation
tool helps train operations personnel in supply chain concepts
and their business implications.
35.3 Days
65.9 Days
95-99%
83.5
Days
Last 1%
Average 42.1
In the country under analysis, our evaluation model identified
2.7m savings from redeploying POSs and thereby avoiding
capex on new assets. Additional savings could be achieved by
increasing capacity and optimizing order sizes for those POSs
that were handling high volumes and high order frequency. By
doing this, cost to serve could be brought down by 4-8%, and
replenishment visits reduced by 17% overall.
Our statistical analysis makes
use of a range of quantitative and
exploratory techniques.
36.8 Days
80-90%
Outcome
Our Analytical Tools and Capabilities
2.5%
Inventory
Inventory Days on Hand (DoH) of SKUs
Bucketed by Turnover Contribution
0-80%
Capgeminis business analytics services team analyzed
large volumes of transactional data for a specific country at
the customer level. POSs and their assets were categorized
according to asset age, throughput performance and
profitability. We developed various scenarios for asset
redeployment and used them to assess savings potential,
applying filters based on asset age, payback period, and
profitability and throughput levels. We discussed the findings
with stakeholders before agreeing on the savings were
realistically achievable.
8.1%
To be Rationalized
Top 20
Solution
Our model was flexible and it was used for scenario evaluation
in at least two other markets in the pilot phase, helping to
identify similar capex savings.
14.8%
44.2%
Potential Savings of 2.7M from Better Use of Point of
Sale (PoS) Assets
Business Analytics the way we do it
The Capgemini Experience
For more details contact:
The team has a strong analytical background with specialization in disciplines of
management, engineering and statistics. Their experience includes CPG and retail,
consulting, research and supply chain.
Terry Sandiford
[email protected]
Our clients get lasting value because we engage directly and meaningfully with
stakeholders at each level of the enterprise from boardroom to shop floor
and warehouse.
Our Capabilities in Supply Chain Analytics
Plan
Source
Make
Store
Demand
Forecasting
Deliver
Network
Optimization
Supplier
Risk
Assessment
Optimising
Production
Plans
Resource
Usage
Analytics
Commodities
Research
Asset
Utilization
Analytics
Inventory
Optimization
Spend
Analysis
Cost to
Manufacture
Inventory
Wastages
Analytics
Plan
Compliance
Analytics
Cost to
Serve
Logistics
Analysis
SKU
Rationalization
Capacity vs
Demand
Analytics
Order Fill
Analysis
Sales
Analysis
About
Capgemini
With more than 125,000 people
in 44 countries, Capgemini is one
of the worlds foremost providers
of consulting, technology and
outsourcing services. The Group
reported 2012 global revenues of
EUR 10.3 billion.
Together with its clients,
Capgemini creates and delivers
business and technology solutions
that fit their needs and drive the
results they want.
A deeply multicultural organization,
Capgemini has developed its own
way of working, the Collaborative
Business Experience, and draws
on Rightshore , its worldwide
delivery model.
Learn more about us at
www.capgemini.com
The information contained in this document is proprietary. 2013 Capgemini.
All rights reserved. Rightshore is a trademark belonging to Capgemini.
