Global Consumer Electronics Manufacturer: VMI Transformation — 30 to 2 Days of Inventory

The Challenge

A global consumer electronics and automotive components manufacturer with 3 North American divisions was running a 200,000 sq ft raw materials warehouse that was unmanned, unlabeled, and unsupervised. Inventory sat at 30 days on hand, yet stock-outs were constant.

Nothing was collocated, locations were not identified, there was no cycle counting, and ERP inventories were wildly inaccurate. Materials already in the building were re-purchased because no one could find them.

Our Approach

The facility was staffed and supervised, racked, and RFID-labeled; materials were collocated by product family; and a Plan For Every Part and material maps made any component findable within minutes.

Cycle counting was implemented and sustained, visual management assigned accountability, and a formal pull system between the plant and the distribution facility replaced ad-hoc truck runs.

Vendor-managed inventory programs were negotiated with key suppliers, and standard work was established for every process in the facility.

Measurable Results

• Inventory reduced from 30 Days on Hand to 2 DOH — a 93% reduction
• Stock-outs eliminated through a pull system between plant and distribution facility
• Cycle count accuracy achieved and sustained at 99.9%
• $42K annual savings in warehouse and manufacturing supplies through sourcing and negotiation
• 5S layout and pull processes established across a distribution facility feeding 3 NA divisions
• Facility transformed from unmanned chaos to a model distribution operation