Key challenges
High days stock on hand (DSOH): The client grappled with elevated DSOH, impacting inventory efficiency.
Substantial working capital investment: The client faced a significant working capital investment in inventory.
Product availability at stores: As a large retailer, ensuring the right products and quantities at stores posed a considerable challenge, necessitating improvements in inventory performance.
Our approach
TMX examined existing processes, from managing inventory to ordering for the stores, and analyzed the client's inventory profile. Subsequently, TMX undertook a comprehensive set of actions to optimize inventory management for the client:
- Performed inventory analysis and identified the need for a long-term investment in Auto-Replenishment Systems.
- Established standardized inventory performance measures and reporting.
- Conducted root cause analysis and formulated action plans across purchasing, logistics, and stores to drive inventory reduction.
- Designed and implemented a user-friendly interim Store Ordering Tool to standardize ordering patterns, representing a significant shift in store ordering behavior and future Auto-Replenishment Systems implementation.
- Recommended and managed the development of tools for the management of Slow Moving and Obsolete products and Out of Stock items.
- Worked closely with the client’s inventory team to identify improvement opportunities in tools and drove increased usage rates for positive results.
The results
With an initial target of 3%, TMX ended up achieved more than a 7% inventory reduction within the initial 9 months of the project. TMX also successfully decreased inventory across the supply chain from distribution centers to stores across Vietnam.