Case Study | Nutritional Products Manufacturer

Lowering Days of Supply on Hand in DCs While Maintaining Service Levels to Stores

Using Market6, a leading provider of adult and infant nutritional products was able to better collaborate with its national retail partner to:

  • Form a team with supply chain and VMI experts consisting of the supplier and grocers in order to identify inefficiency points in the supply chain process
  • Track inventory vs. demand for each item in each warehouse daily
  • Develop a more accurate days of supply on hand measure to drive smarter, right-sized and right-time shipments into each warehouse
  • Set up a Procurement Scorecard to track service levels for each DC

Challenge

When a top U.S. grocer asked this supplier to find new ways to take costs out of their supply chain, the CPG launched a project to establish a faster replenishment process for shipments delivered into the grocer’s two warehouses. The project had three goals:

  • Reduce inventory levels in the grocer’s warehouses
  • Increase the efficiency of shipments into the warehouses
  • Maintain the service level, fill rates and on-time delivery of store orders

Solution

A team made up of supply chain and VMI specialists from the CPG and the grocer began using Market6’s Warehouse Inventory Report to track daily warehouse inventory levels for each item. The CPG’s VMI specialists used this information, combined with their internal demand forecast, to calculate days of supply on hand and to place more accurate, timely orders into each DC.

The team also used Market6’s Procurement Scorecard to track the CPG’s level of service into each DC. Key metrics included:

  • Case and order fill rates
  • On-time order fulfillment into DCs
  • Service levels on orders from DCs to stores
  • Days of supply on hand in each DC 

Allowing both the CPG and grocer’s team members access to the same performance measures in a single, consolidated Procurement Scorecard improved communication, transparency and accountability.

Impact

As a result of this project, the CPG was able to:

  • Reduce average days of supply on hand by three days in less than 90 days
  • Save the grocer more than $300,000 across all stores
  • Maintain a shipment forecasting accuracy rate within 3% across all of its brands to help reduce out-of-stock occurrences and efficiently execute on promotions

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