International food manufacturer

Challenge

The purchasing function within the engineering department had become over reliant on ad-hoc 'special' orders being placed to meet the site's needs in acute situations.

Ordering on this basis cost the client in both downtime, due to stock not being readily available in the stores, and also through carriage charges, with last minute orders being raised to get critical parts to site at short notice.

Objectives

  • Address the root causes of failing stores functions, poor stock control and stock purchasing.
  • IESA's objective was to critically analyse the safety stock levels in the stores and implement best in class stock management systems, also to introduce automated stock purchasing and provide the required financial stock visibility to client management to create confidence in this process.
  • This was proposed with the intention of reducing downtime, reducing carriage charges, improving supplier compliance and also deliver to the client a working capital reduction programme with VMI and automated consignment taking ownership of fast moving stock.

Solution

In partnership with the engineering team, IESA quickly identified the critical items currently out of stock and their value. This data was then analysed by the on-site engineering management team, and the true stock value of goods to be purchased was established. In parallel with this, IESA carried out a safety stock analysis on all current stock and brought the newly approved stock purchases in line to achieve a base level foundation of stores inventory.

All items identified and authorised were purchased as stock to fulfil the new safety level targets. The stock was located in newly organised stores to improve clarity and ensure ongoing compliance with good stock management.

To assist in the transition to new working practices and support the initial working capital requirements, IESA implemented a working capital reduction programme, whereby IESA took ownership of consignment stock of fast moving products.

Control and compliance of this stock was achieved by introducing IESA's warehouse and inventory system - IESA online - enabling the increase in control procedures, resulting in greater clarity and visibility of authorised purchases and stock movements.

Benefits

  • VMI and automated consignment ownership of fast moving stock delivered an initial working capital benefit to the client of approximately 25%.
  • Safety Stock Level implementation has virtually eliminated 'stock out' situations when IESA process compliance is followed.
  • Increasing both the automation and centralisation of purchasing through IESA's specialist procurement team, has resulted in an annual site labour benefit of £10,000.

Testimonial

"IESA purchasing processes have significantly improved stock management in our stores. Increased stock availability and clear online reporting have meant we have considerably reduced the risk of stock outs and downtime, and the online reporting has given us a clear and easy way to manage our spend." (Engineering Manager)