Case study REF#11
THE CHALLENGE
Eliminate Systemic Costs
A global construction materials company faced a 2–3% year-over-year, increasing cost of goods sold (COGS) in a highly competitive and price-sensitive marketplace. The client challenged ArMur Consulting to eliminate systemic cost drivers in its Supply Chain decision-making to determine Demand, Supply, Inventory, and Customer Service Policies.
OUR FINDINGS
Identified nine items for improvement
- No clear ownership or accountability existed for planning decisions.
- Demand planning was led by Finance in isolation, using dollars instead of production units.
- Sales-driven forecasts were consistently over-optimistic, missing targets for 12 consecutive quarters.
- Planning processes varied across business units and products, with minimal input from Sales.
- End-of-month and end-of-quarter promotions caused demand spikes and manufacturing instability
- Supply chain processes were manual, fragmented, and overly reliant on individuals.
- Excess and slow-moving inventory accumulated across the distribution network.
- Warehouses lacked technology to manage inventory effectively and efficiently.
- Loose customer service policies negatively impacted profitability.
IMPLEMENTATION
We focused on 5 areas to implement a cross-functional integrated business planning process
Established a unified planning process to align medium- to long-range demand and supply across the organization.
Engaged key stakeholders from Sales, Product Management, Supply Chain, Manufacturing, and Finance to drive synchronized decision-making.
Eliminated End-of-Month and End-of-Quarter promotions, reducing demand volatility and manufacturing inefficiencies.
Rolled out a Warehouse Management System (WMS) with barcoding to increase inventory accuracy and warehouse efficiency.
Added Logistics Dock Scheduling capabilities to optimize inbound/outbound flows and reduce bottlenecks.
Implemented Material Resource Planning (MRP) and Batch Management to support consistent, data-driven manufacturing planning and tracking.
Developed and deployed a unified planning framework that aligned siloed business functions under a strategic operating rhythm.
Hard-coded customer accommodation rules into SAP to standardize handling of non-standard order requests.
Introduced Delegation of Authority (DoA) protocols and an exception approval process to streamline decision-making and reduce ambiguity.
Improved process discipline and accountability in planning and execution across functions.
Standardized planning and fulfillment processes to ensure repeatable, scalable, and compliant operations.
Reduced ad hoc decision-making and variability in inventory and customer service practices.
RESULTS
All delivered with a 9:1 Return on Investment
Ongoing $MM Inventory Reductions
We have tried to implement IBP in the past several times, but I think this time, we finally got it right. ArMur Consulting brought in the implementation discipline we sorely needed to get our organization focused.
Supply Chain VP
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