Turning A $3-million Write Off Into Cash...

CLIENT: Packaged Goods Company.

PROBLEM:

To streamline manufacturing, common stock keeping units (SKUs) were being introduced in North American markets. Supply lines involved six production plants, 14 warehouses, 200 distributors and 40,000 end-users. Consolidating 500 SKUs into 200 would make redundant old inventory valued at $5-million. The pressure to make a smooth and complete supply chain management transition was so great that the corporation set aside a $3-million provision to cover a write-off for the disposal of obsolete product.

OPPORTUNITY:

By tightening the supply chain, net annual savings to the corporation would be enormous – and on-going, year after year.

DELIVERABLES:

Atticus created, implemented and managed a plan that provided six key deliverables.
•The client invested in a temporary facility to stage and store new product, allowing for rigorous planning and scheduling of customer conversion.
•The transition at each customer site was managed by a master schedule for each sales territory.
•Atticus aligned customer-specific sales forecasts to the production and distribution demand planning system.
•Next, Atticus created a “one-way” order processing program so that, once converted, customers would not revert to old-line product.
•Finally, Atticus trained employees: The sales force, manufacturing, inside sales office, warehouse and delivery plus the staff of distributors.

OUTCOME:

The plan saw the product line conversion on time, under budget, with no loss of customer or sales volume.
•Inventory utilization rose to almost 100%, meaning the $3-million write-off provision was not needed and returned to the treasury.
•Manufacturing efficiencies saw gross margin increase by $2-million annually.