A $130M distributor of automobile, truck and recreational “Batteries” was seeking to find an optimal inventory strategy, including specific SKUs, quantity and locations. Total sales, sales margin and inventory holding costs were not on track nor understood. Growth and variance in seasonal and regional demand was a challenge for the best inventory placement. 3PLR was challenged to build a dynamic inventory solution to increase the order fulfillment rate on higher margin sales SKUs and lower the overall inventory holding costs. Our client was seeking to have the optimal inventory placement

Our initial baseline review of inventory placement, order fulfillment quantities and related margins exposed the need for a two phased approach to their inventory placement challenge. First: set a measurable strategy to optimize the inventory placement and order fulfillment margins by applying fulfillment confidence intervals (CI) driven by margin using a multiple regression analysis. The CI is then applied to historical demand to calculate the on-hand quantity, by region, to support the optimal CI. Next, implement a dynamic process to capture current sales, recalculate the on-hand quantity required and initiate the inventory placement process.

The comprehensive and accurate data presented enabled 3PLR to quickly integrate the client information into analysis and show the benefits.  Initial analysis showed an optimal inventory position could be reached with 28% less inventory. Lost sales from the prior inventory strategy was estimated at  $15M.  The client has successfully adjusted purchasing and inventory placement strategies in 5 locations, followed by expansion plans.