Case Study: Reducing Costs through Improved Inventory Management

LB Water prides itself on responsive and accommodating customer service, which requires a robust inventory to equip or repair a municipal or industry waterworks facility. Over time, however, the inventory had grown and it was becoming a challenge to maintain response time and efficiency. LB Water’s leaders recognized this issue and wanted to address it, but they lacked the process improvement expertise or objective perspective required to devise solutions. Through a referral from a trusted business partner, LB Water turned to RKL for help assessing and streamlining its supply chain and inventory management approach.

RKL’s Operations Consulting team started by conducting a thorough assessment of LB Water’s supply chain, which included visits to each of the company’s eight sites, employee interviews, data analysis and processing mapping from customer order through delivery. After the conclusion of this research, RKL consultants recommended that LB Water shift to a more efficient and effective Right Material-Right Place-Right Time (RM-RP-RT) inventory and fulfillment model. In order to track progress toward this goal, RKL and LB Water implemented Key Performance Measures (KPMs) for the project.

Successful process improvement initiatives require the buy-in and support of the team responsible for execution, so RKL supported LB Water through a series of employee town hall meetings to explain the new approach, answer questions and align everyone around the ultimate goals of increased customer satisfaction, company profitability and future growth.

With the support and confidence of the LB Water team, RKL set about executing the shift to RM-RP-RT. Most notably, RKL helped LB Water transition into a new inventory management strategy that relies upon sales history data rather than the inflexible minimum and maximum levels previously used. Other improvements included the reorganization of warehouses and yards, the reduction of older or obsolete inventory and the reconfiguration of delivery routes to fulfill customer orders from the closest possible location.

Since last year’s company-wide launch of RM-RP-RT, LB Water made significant strides toward its goal of reducing inventory costs while maintaining the highest level of customer service. Company leaders report that inventory across their eight locations has dropped to 2015 levels, freeing up capital for additional investment in future growth and improving its agility to fulfill orders with greater efficiency.

Thanks to the KPM dashboard RKL installed, LB Water employees can measure success in real-time and identify future areas for improvement in collaboration with their trusted operational consultants at RKL.

 

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