White Paper. Cost Savings by Implementing an Innovative Inventory Management Solution. March 2014

Transcription

1 March 2014 White Paper Cost Savings by Implementing an Innovative Inventory Management Solution. 1 UTi IMS is a wholly owned subsidiary of UTi Worldwide Inc.

2 About Uti-Ims Inventory Management Solutions, Inc. UTi Inventory Management Solutions, Inc. (UTi-IMS) is a wholly-owned subsidiary of UTi Worldwide Inc. UTi-IMS uses a unique solution to manage inventory for global companies with highly-complex supply chains. The UTi- IMS solution uses consolidated consignment for MRO and spare part inventory, which allows customers to pay for inventory only when it is needed from a streamlined single source. UTi-IMS efficiently controls inventory levels to make sure only what is needed is stored, which reduces inventory costs. This frees up capital and allows customers to reallocate resources to focus on more strategic objectives. Note: The customer in this white paper is not identified out of respect for their privacy. They are one of the world s top 5 semiconductor companies.. 2

3 The Problem A high tech semiconductor manufacturer (the Client) was looking to reduce MRO and spare part inventory and consolidate suppliers to free up capital and obtain higher levels of efficiency in the procurement process. Their current staff was spending most of their time in transactional work and less time on strategic objectives. How could they pull this off without affecting their current business? Could they do it with a dedicated staff and risk hurting their current customers? With millions of dollars in inventory and hundreds of suppliers utilized globally, the Client was concerned this could take years to accomplish by doing it themselves. The Solution Hiring another company to manage inventory can help, but it takes specialized expertise to accomplish this quickly. Most inventory management companies typically take just as long to do what s needed. The Client s choice was to hire UTI Inventory Management Solutions, Inc. (UTi-IMS) to apply the UTi-IMS Methodology to their operations. The UTi-IMS Methodology consists of five elements that, when combined, create a unique solution in the industry. The five elements are: (1) 360 Degree Support, (2) Transparency, (3) Pay On Consumption, (4) Advanced IT & Optimization, and (5) Universal Solutions. 3

4 Freeing Up Capital The 5 Elements of IMS Methodology 360 Degree Support The Client already had staff on site supporting internal customers, but had little time to prioritize inventory issues. UTi-IMS provided a full purchasing solution that resolved multiple concerns for the Client. First of all, UTi- IMS provided on-site support staff to handle the transactional work and allow procurement to allocate resources elsewhere. This allowed UTi-IMS to focus on inventory levels, satisfy internal customer needs, and look for opportunities to improve the process. Secondly, UTi- IMS provided the transactional purchasing support to consolidate supplier purchases via their centralized purchasing group. The UTi-IMS purchasing group purchased materials from suppliers, shipped them to the Client s sites, and then UTi-IMS held the inventory until it was consumed. Pay On Consumption Utilizing this same philosophy of holding inventory for the Client, UTi-IMS replenished inventory as needed and held it until the Client consumed it. This allowed the Client to immediately reduce inventory by millions of dollars while UTi-IMS focused on right-sizing the inventory. The Client was interested in knowing what their costs would be moving forward. UTi-IMS provided a simple, low-cost pricing solution. In addition to the benefit of not having to carry inventory on their books, knowing costs ahead of time helped the Client to immediately realize value across the enterprise. 4

5 Freeing Up Capital The 5 Elements of IMS Methodology Advanced IT & Optimization The Client wanted to keep track of all information in their systems so UTi-IMS created a process to update the Client s systems, as well as the tools used by UTi-IMS. UTi-IMS continues to update the tools to provide the most efficient processes available. Optimizing inventory for the Client was important to help reduce inventory, yet support the manufacturing organization. UTi-IMS focused on setting up the ordering levels that optimized the ordering process to focus on reducing inventory levels as well as decrease zero bins. The efforts in the first year resulted in a reduction in Ending On Hand (EOH) inventory and significantly lower zero bins.the consolidation of suppliers, from over 500 to a single source, significantly increased efficiency of the Client s payment process. Although more suppliers are being added, there is no increase in the client-side workload. Transparency UTi-IMS believes in a transparent relationship with its customers. From the Client, UTi-IMS purchased millions of dollars of inventory, which was eventually consumed. The small mark-up fee was fully transparent and negotiated cost reductions were passed on to the Client. There were no hidden fees, making it easy for the Client to see the clear picture. Universal Solution The processes and methodologies used in this case study are not unique to the Client, but can be utilized for any supplier and for any manufacturing company. UTi-IMS provides a solution that s universal across all organizations and industries. 5

6 Results The results for the Client provided significant savings. The ability to free up capital (over $7.5M) and reduce inventory levels (by over 15%) through the implementation of the 5 Elements of the UTi-IMS Methodology continue to contribute to significant savings for the Client. Reducing zero bins from over 15% to less than 2% also keeps production moving. 6

7 Thank you! 7 UTi IMS is a wholly owned subsidiary of UTi Worldwide Inc.