Capital freed up and service level raised
The customer felt that there was a surplus of material in storage at the same time that they had a shortage of materials that created disruptions in production.
ÅF was commissioned to study the potential for reducing capital tied up and raising the service level. Our analysis was based on mapping of the material flow from raw material to finished product and identification of inventories. We also charted how they worked to control the flow. Furthermore, we performed calculations to analyze the need for buffer stock to manage fluctuations in demand. After completing the mapping and analysis, we were able to dimension buffer and cycle stocks to achieve the desired service level for the respective inventories along the flow. To realize the available reduction potential, we then introduced new working methods and tools for flow control. We also analyzed the potential in products in progress.
Capital tied up in inventories was reduced by 38 per cent, equal to SEK 11 million, and in products in progress by 33 per cent, equal to SEK 2 million. In addition, we identified a potential of SEK 3 million in “dead” articles, at the same time that the service level in inventories and warehouses could be raised from 60 to 97 per cent.