Imagine you have multiple warehouses across Texas, Georgia and Ohio servicing a Fortune 100 client in the auto industry.
The customer has plants all over the country and so you stock the same part in all of your warehouses, minimizing the delivery time. However, in order to minimize inbound transportation costs, each of your warehouses orders the same exact part from a different vendor and, therefore, this same exact part has multiple SKU codes. This results in rush orders from vendors at inflated costs. Internal communication difficulties, data inconsistency and cross-facility inventory management drove increased costs.
We examined the current SKU system, while effective in many instances, it didn’t account for this operation’s particular needs: namely, that the stock level of a certain part, regardless of SKU or geographic location, had to be known in order to cut down on unnecessary costly orders.
We identified all the attributes the SKU system should have. We then performed an intense market search and prepared a straight forward comparison of the costs and benefits of each system. We needed a system with added flexibility.
We worked with the client in adding a second level of item identification, a unique icon or photo to each individual SKU. That icon or photo corresponded to a particular part. Using the features of the SKU system, we implemented search functions based on several criteria. We also were able to aggregate quantities by icon alone giving management an overall picture of their total stock.
Using the features of the SKU system, we implemented search functions based on several criteria. We also were able to aggregate quantities by icon alone giving management an overall picture of their total stock. We were able to cut down the number of unnecessary orders of the same part by any single warehouse and give management better knowledge over how their inventory flows.
This first step to inventory management opened the door to the second step - a balancing of cost and service levels across all three warehouses, a project we just implemented in early 2014.