| Integrity Consulting Success Stories
Manufacturing Plant Ties Up Cash Flow In Inventory
Customer’s Problem Summary of Why the Plant Had $9 Million Excessive Tied Up In Inventory:
- The warehouse was full of raw materials including aged, expensive materials.
- Most of the aged materials were from lost customers or expensive trials & couldn’t be re-used.
- Manufacturing often didn’t have enough raw materials to finish a job but the system showed plenty.
- Planners were blindsided by frequent raw material shortages, so Planners tried to order extra.
- Raw material vendors were often late with deliveries & Planners couldn’t get solid delivery dates.
Root Causes:
- Much of the aged raw materials were from lost customers or trials and should have been scrapped.
- Production was failing to enter raw material usage in the system for each job.
- There was no process for checking raw material storage tanks.
- Material ordering was a manual process.
- The system interface between the Plant & Corporate Purchasing was weak & dropped order requests.
Implemented Changes:
- Implemented production recording processes and monitored them closely. Checked storage tanks daily.
- Stopped ordering some raw materials and had aged materials slit to fit jobs.
- Shipped some aged materials to other plants, recycled some aged materials to re-coup costs.
- Implemented process with Purchasing to fix order issues from Plant to Purchasing to Vendor.
- Implemented Plant purchasing process to follow up on all orders with vendors, automated process.
- Reduced inventory levels by $9 million dollars and eliminated raw material shortages on jobs.
$5.5 Million Was Put to Cash Flow in Under 5 Months
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