We Cut This Manufacturer's Inventory in Half Without Slowing Production
- Mike Johnstone
- 6 hours ago
- 2 min read
Industry: Manufacturing | Client: Transportation Equipment Manufacturer |
~$200M in Revenue
Situation
This manufacturer had a warehouse full of parts it could not find.
Inventory accuracy ranged from 25 to 50 percent. Independent audits confirmed the number. More than $21 million in raw material inventory was on the books, but a significant portion was either misplaced, in no-demand status, or tied to duplicate orders caused by parts that could not be located.
When a part went missing, production ran a duplicate order. That created more inventory. More cost. More chaos.
Accounting could not reconcile the numbers. The warehouse floor was running blind. Leadership had no confidence in the data they were using to plan production.
Actions
We started with accountability.
First, we hired a dedicated Inventory Manager and assigned sector ownership across the warehouse floor. Every section had an owner. Every discrepancy had someone responsible for resolving it.
Then we fixed the data. We cleaned up MRP parameters, corrected purchase order pricing, and updated system records to reflect what was actually on the floor. Bad data was the root cause of most of the waste. We treated it that way.
Next, we built a cycle-count discipline. Regular counts replaced the annual physical audit. Problems surfaced in days instead of months. We also launched a scrap-and-recycle program to move dead inventory off the books and recover value wherever we could.
On the supplier side, we identified quality issues that had gone unaddressed and pursued chargebacks to recover costs the company had been absorbing silently.
Results
In under a year, the numbers shifted dramatically.
- Inventory dropped from $22.9M to $11.4M - a reduction of more than $11 million
- Days Inventory Outstanding fell to 16.5
- Cycle count accuracy rose from 25-50% to approximately 90%
- Recovered over $454,000 in supplier chargebacks for quality issues
Production did not slow. Planning became more reliable. The warehouse team shifted from firefighting to managing with real data.
What This Means for You
If your inventory records do not match your floor, you are making decisions on bad data. That costs money every day.
We have fixed this before. We can fix it for you.
Every engagement starts with a free 30-minute call. You tell us where inventory is breaking down. We tell you exactly where to start.
No pitch. No obligation. Money-back guarantee if we do not deliver results in six months.