Inventory Optimisation, Demand & Replenishment Planning 4

Client: Paper Manufacturer

Our client is the largest independent paper merchant in Australasia that is focused on the promotion and selling of a comprehensive range of Specialty, Self Adhesive, Digital, Coated and Uncoated Paper and Board products.

The group's Australian and New Zealand operations generates $400 million in sales annually from 14,000 items stocked in 10 locations.

GRA worked with our client with the following outcomes: service level improvement from 62% to a consistent 96%, $14 million inventory reduction (or 31%), centralised purchasing process, creation of an exception-based planning process, and S&OP implementation. 

GAINS was fully implemented and integrated with our client's ERP and WMS systems within 12 weeks. Our client then began using GAINS to manage by exception, automate the creation of purchasing schedules for overseas suppliers and re-balance their inventories across Australia and New Zealand based on service level and cost optimisation.

Key Benefits
  • service levels increased from 62% to a consistent 96% in seven months
  • centralised purchasing process
  • $14 million or 31% inventory reduction
  • created an exception-based planning process and implemented S&OP
  • engaged in schedule sharing initiatives with key suppliers
Operating environment
  • largest independent paper merchant in Australiasia
  • overseas suppliers
  • 14,000 items stocked in 10 locations
  • $400m annual sales
  • 24 hour customer delivery window

In addition, our client used GAINS to increase its service levels from 62% to a consistent 96% without increasing inventories – based on “complete order fill first time every time from stock”. Now that service levels have improved, our client is focusing on freeing up cash held in inventory. To date, a $14 million or 31% inventory reduction has been achieved.

Michael Byrne, Group Stock Controller:

“The additional management control and improved reporting that GAINS provided enabled us to centrally manage our purchasing. Purchasing used to happen independently in each state and New Zealand – and that took six people two weeks, or 24 man days, to complete each month. Now I do the purchasing each month for all 14,000 items in three days. It’s a big relief for the branches because they can focus more of their time on sales and marketing.” 

“Now I do the purchasing each month for all 14,000 items in 3 days – that used to take 6 people 2 weeks.” 

“We selected GRA because they guaranteed our success, clearly demonstrated their expertise and focused on the business process and people issues. We needed a world class system and an organisation that could help us with the business issues and share their knowledge. We’ve been through tough implementations before, and we knew what to look for this time. We’ve never questioned our decision – actually, it’s been constantly confirmed.” 

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"GRA have helped build the capability of the organisation by engaging and motivating Lion's Senior Leadership Team to be active Leaders through the IBP process."

– Ryan Dhondy, IBP Capability & Development Leader Vic, Lion Dairy & Drinks

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)