Service improvement
The Improvement Challenge
Supply chain service data showed that during periods when inventory levels were below target, the UK market suffered disproportionally lower service rates than other global markets. The UK was a large and important market, and naturally the commercial team required a resolution that would see UK service levels at least equivalent to global levels. They suggested that a separate warehouse for the UK market would resolve the issue. However, resolving the issue in this way either through an additional physical or virtual warehouse would increase inventory levels, administration and therefore cost to the business. It may also not fully solve the issue. We believed there was a better way.
Addressing the Root Cause
The proven root cause of the issue was that the UK warehouse not only serviced UK customers, but also export and deployment orders. Export orders in particular could be high volume and value, plus difficult to predict. Their value to sales meant though that if inventory were available, it would be assigned to an unforcasted export order. Further to this, when inventory was lower than safety stock levels, large deployment orders to other warehouses, made on a weekly basis, could wipe out stock intended for the UK market. Knowing the root cause allowed the team to brainstorm a number of potential solutions.
Brainstorming & Solution Selection
A cross functional team including deployment and export planners, distribution and ERP system experts brainstormed solutions. Each proposed solution was then scored (using a solution prioritisation matrix) against speed to implement, resource / ease of use and overall impact. The pros and cons of each solution were also evaluated.
The Improvement
Scoring highest, a number of simple, business rules and system changes were implemeted which resolved the issue. This included a) increasing the deployment horizon, a simple master data change, meaning an increased level of inventory would remain following raising an inventory deployment order. b) deployment lot size was reduced to 1 case, meaning that needlessly shipping a larger minimum order quantity would be prevented, again a simple master data change which would leave more stock in the warehouse. c) forecast consumption rules were amended for export countries, enabling them only to consume their own inventory forecast. These changes were initially piloted on a number of key brands and then once proved successful, expanded across the whole business. Service levels for the UK increased in line with the rest of the globe.
