Successful Digitization in Inventory Management: 28% less stock at Angst+Pfister

by Julia Severins

Across all industries, suppliers are struggling with a variety of challenges in order to ensure accurate and on-time deliveries to their customers, while constantly shortening the processing times. For competitive markets and in times of growing e-commerce, digitization in supply chain management, procurement and planning is crucial – suppliers have to prove their adaptability.

What is digitized inventory management?

Software programs are the basis of such digitization and are thus indispensable for the supply chain management of the future. However, depending on the specific objectives, not every system is suitable. Traditional ERP systems are no longer sufficient for creating sustainable storage cost reductions without jeopardizing customer service. After all, digitization is not about collecting and managing data, but rather about intelligently using the most relevant information, in order to

  • evaluate stock-outs,
  • identify fast-moving and non-moving stock,
  • prioritize stocks and orders,
  • properly define safety stocks,
  • forecast future demand,
  • start procurement and production operations on time,
  • make cost-optimized orders,
  • introduce new items (or range of products) in a cost-efficient way,
  • optimally aggregate purchase orders,
  • take supplier conditions into account.

All these actions are necessary to meet the requirements of the fast-paced digital market. Due to the ever-increasing amount of data and products with shorter life cycles and in times of same-day delivery, it requires many employees and working hours to accomplish this task when using just one supporting management software.

Inventory management can be easy

In order to be proactive and remain a reliable partner for its customers, Angst+Pfister AG from Zurich upgraded its IT landscape. At the core of its business, the company operates as a central supplier of components in the areas of sealing, fluid, plastics, antivibration, and sensor technology, as well as engineering solutions. As a prerequisite for achieving a reduction in the number of procurement channels and expenses, Angst+Pfister customers must be able to place their full confidence in the company’s ability to deliver on time. After all, a delayed delivery creates a domino effect, inevitably resulting in shortages and rescheduling efforts for the following manufacturer or distributor. Many customers of Angst+Pfister rely on just-in-time processes and put their trust in the highest quality of service. This makes reliability one of the most important success factors in this business.

For this reason, the internal supply chain processes at Angst+Pfister had to be optimized.  Major challenges were high warehouse stocks, nonetheless lacking items in demand, which negatively affected service quality. Moreover, a high proportion of "non-movers" and "slow movers" were stored at the company's warehouse, which resulted in long-term tied capital. Apart from various process optimization efforts, such as the setup and centralization of the purchasing department, Angst+Pfister has also been successfully using intelligent software for the optimization of inventory management for several years.

Warehouse stock decreased by 28%, service level increased by 10%

Only ten months after the implementation, Angst+Pfister registered a stock reduction of 28% and a 10%-increase in service level. The company owes this success to decision-making algorithms, which use the right forecast procedure to consider past sales data and provide reliable statements about future demand. Thanks to the management-by-exception approach, inventory managers are actively informed which of the 350,000 items need to be urgently processed. In addition, BOMs for item components are displayed together with the associated suppliers. Today, smooth and efficient workflows provided by the system give planners more time to focus on strategic tasks.

Conclusion

Investing in an inventory optimization software can bring great success in a very short time. For one thing, warehouse optimization releases capital, which can then be used for further investments in modern technology. Furthermore, implementation of digitized processes allows suppliers to enhance their companies' positive image and establish trusting relationships with their customers, which are reflected in new orders and growing profits.

If you would like to know more about the project at Angst+Pfister, you can request the complete article here.

 



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About the author

  • Julia Severins

    Julia Severins has worked for INFORM since 2012 and writes articles on the topics of inventory optimization, demand planning and inventory sampling.

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