Background and Challenge
A manufacturer and distributor of apparel and accessories was seeking greater profitability and operating efficiency. The company turned to L.E.K. Consulting to identify ways to reduce its working capital and improve inventory management efficiency.
Approach and Recommendations
L.E.K. worked closely with stakeholders in multiple areas of the company’s operations to examine its current business processes. Based on this research and the L.E.K. team’s previous experience in this area, the team identified a number of root causes behind the company’s sub-optimal inventory management including:
- A lack of coordination across seasonal demand peaks and troughs
- A disconnect between the sales and operations departments
- Insufficient visibility into demand and inventory throughout the business
The L.E.K. team addressed these root causes by designing new systems, processes and organizational responsibilities. Through a redesigned Sales and Operations Planning (S&OP) framework and a suite of database tools, the client could now coordinate across multiple departments more efficiently and link long-term strategic plans and expectations to day-to-day operations.
L.E.K.’s recommendations for a redesigned S&OP and the suite of tools were implemented by the client immediately after the project’s completion. Within months, the manufacturer gained a real-time awareness of its sales trends, which enabled the manufacturer to improve its inventory management capabilities. A senior executive at the manufacturer stated, “[Our management] team really listens to L.E.K….you guys have established respect and credibility with a traditionally difficult group.”