Cost Reduction - Inventory
Client lacked inventory control, with limited understanding of available inventory on-hand, accurate financial value, accountable owners and system traceability. The ask was to eliminate excess / obsolete inventory, while instituting a sustainable inventory management system.
Axxum Consulting Approach:
Axxum personnel assumed interim leadership of Inventory Management, holding the client’s first physical inventory in quite some time to create a baseline for current available on-hand inventory, financial value of inventory, and determining the amount of obsolete inventory or that in excess of client needs. Axxum created process flows from receipt of raw materialthrough production and finally customer shipment, implemented barcode/scanning capabilities and instituting a physical “traveler system” to improve material traceability and owner accountability.
As a result of Axxum’s actions, the client experienced a 40% inventory reduction through the burndown of excess / obsolete inventory, resulting in a $5.6M working capital improvement in one-month’s time. The efforts reduced the need for additional indirect headcount and assets previously used to support the base case operation, resulting in an additional annual savings of $1.9M.