How We Improved Inventory Efficiency and Service Level in a 50,000-SKU Operation
Overview
A European multinational company faced significant challenges improving inventory turnover and operational efficiency in its Brazilian operation.
Although the company used a global planning system, local results were below expectations, directly impacting:
- product availability,
- service level,
- replenishment efficiency,
- and inventory management performance.
The operation involved approximately 50,000 SKUs and a highly complex inventory environment.
Main Challenges
Customer Service Metrics Did Not Reflect Real Availability
Published service level indicators showed results above 90%, but those metrics included secondary deliveries completed days after the initial order fulfillment.
In practice, first-pass customer service level was close to 70%, creating customer dissatisfaction due to long waiting times for products transferred from other distribution centers.
Complex Safety Stock Management
Inventory parameters depended heavily on manual adjustments across approximately 50,000 SKUs, making inventory management difficult and difficult to scale efficiently.
Operational Limitations
Planners faced challenges fully utilizing the capabilities of the existing planning system, reducing the effectiveness of replenishment and inventory decisions.
Actions Implemented
1. Service Level Metrics Review
Customer service performance began to be measured based exclusively on first-pass order fulfillment, providing a more realistic view of actual product availability.
2. Strategic SKU Segmentation
Products were segmented according to:
- order frequency,
- sales importance,
- cost,
- operational criticality.
Specific replenishment and safety stock policies were then defined for each inventory group and distribution center.
3. Monthly Inventory Turnover Monitoring
Periodic inventory turnover analyses were implemented for each distribution center, improving visibility into slow-moving inventory without negatively affecting healthy-moving products.
4. Training and Process Standardization
Planning teams were trained on the new inventory policies and operational parameters, improving efficiency while maintaining the existing organizational structure.
5. Cross-Functional Alignment
Regular meetings between planning, sales and finance teams were implemented to review KPIs and align operational decisions with customer needs.
Results Achieved
Significant Improvement in First-Pass Service Level
The operation achieved a meaningful improvement in effective customer service level, reducing one of the main sources of operational dissatisfaction.
More Structured Inventory Processes
Inventory policies and replenishment criteria became more consistent, structured and aligned with real demand behavior.
Better Operational Visibility
The company gained improved visibility into:
- critical SKUs,
- excess inventory,
- • inventory turnover performance,
- and actual replenishment needs.
Practical Impact
This project demonstrated how inventory policy review, intelligent SKU segmentation and structured demand analysis can significantly improve operations involving:
- tens of thousands of SKUs,
- multiple distribution centers,
- irregular demand patterns,
- • and high operational complexity.
Facing Similar Inventory Challenges?
If your operation struggles with stockouts, excess inventory or managing thousands of SKUs, contact us to learn how data-driven inventory analysis can help improve availability, turnover and operational efficiency.