Program Deployment for Auto Parts – Snapshot.

What-If scenario modeling helps answer "What if we had used Forecast NOW! during such-and-such period?"

Auto Parts

Company at a Glance - the company sells auto parts and accessories

Modeling conditions:

Simulation modeling was run on company data on sales and inventories for 2011, predicting warehouse performance if orders had been made using Forecast NOW's recommendations for 2 months. Orders were made every two weeks.The simulation results were compared with actual stocks and sales, ignoring items that had experienced less than two sales or orders for the period. Savings included both purchase price savings and the potential stockout that may have occurred from reducing inventories.

Problems found inside the company

Our modeling case showed that the rate of growth of inventory levels for goods was quickly outpacing sales growth. This effect was demonstrated vividly on graphs:

 

Inventory Growth

 

 

Sales Growth.

 

This way we saw clearly that the company had room to lower its inventory level.

Modeling results are shown in the below graphs.

Inventory levels possible with Forecast NOW! are shown in dark red; actual levels are shown in red.

Forecast NOW! clearly offers a significant reduction in warehouse inventory.

Or, in numbers, around 60% of warehouse area worth of goods.

This is around 10% of the warehouse space in dollar-terms.

This level of savings is significant, freeing up major cash flow and improving company finances. (If we put warehouse space at 10 million, the savings is on the order of 1 million ).

Savings at the item-level:

 

Item 1.

 

 

It's easy to see that the safety stock level for this item was set too high at 14 units. With the software's recommendations, it could have been reduced to 2 units.

Item 2

 

An overstocking problem is apparent here as well - with the program's recommendations, the stock level could have been cut by a 1/5.

Item 3

 

Once again too much stock! At the period end we see that inventory levels for this item began to fall, however Forecast NOW! would have greatly increased this effect.

Modeling Results.

The company could have used 60% less warehouse space.

10% of warehouse space in terms of money spent could have been saved.

As we see, the simulation modeling shows the savings for the company that could be realized with Forecast NOW!. With warehouse spaced valued at 10 million RUB, there is a potential savings of 1 million.