How We Increased Service Level from 65% to 90% Through Inventory and Demand Analysis

Overview

A Brazilian distribution operation was struggling with low product availability, frequent stockouts, and inconsistent replenishment decisions.

Through inventory analysis, demand forecasting, and purchasing process improvements, service levels increased from approximately 65% to 90% within nine months. During the same period, sales grew by more than 30%, supported by improved product availability and more consistent inventory management practices.

The project helped create a more reliable and efficient supply operation while establishing a stronger foundation for future growth.

Main Challenges

Demand Planning Limitations

Demand projections were primarily based on quarterly averages, making it difficult to respond to seasonality, sales trends, and demand fluctuations.

Frequent Stockouts

Insufficient safety stock policies and operational limitations caused recurring shortages of important products.

Low Service Levels

Customers frequently received incomplete orders, negatively affecting customer satisfaction and operational performance.

Inefficient Inventory Management Processes

The operation lacked consistent inventory management metrics and faced challenges related to supplier performance and replenishment reliability.

Actions Implemented

1. Review of Service Level and Inventory Metrics

Operational metrics were redesigned to provide better visibility into inventory availability, customer service performance, and replenishment priorities.

2. Demand Forecasting Improvements

A structured forecasting process based on historical sales data was implemented to support more accurate purchasing and replenishment decisions.

3. Inventory Policy Adjustments

Inventory parameters were reviewed considering lead times, demand behavior, and operational constraints to improve product availability while avoiding unnecessary inventory accumulation.

4. Purchasing Process Improvements

Purchasing workflows were reorganized and supplier performance issues addressed to improve replenishment reliability and responsiveness.

Results Achieved

Service Level Improvement

Service levels increased from approximately 65% to 90% within nine months, significantly improving product availability and customer service performance.

Sales Growth Support

Sales grew by more than 30% during the same period, supported by improved inventory availability and more effective replenishment decisions.

Better Inventory Visibility

The operation gained better visibility into demand patterns and critical SKUs, enabling more consistent and data-driven purchasing decisions.

Sustainable Operational Improvements

Inventory management and demand planning practices became fully integrated into daily operations, creating a more stable and predictable supply process.

Long-Term Operational Impact

The project established a stronger operational foundation for future growth and improved alignment between local inventory management practices and broader business objectives.

Practical Impact

This project demonstrated that significant improvements in product availability can be achieved without simply increasing inventory levels.

By combining demand forecasting, inventory analysis, inventory policies, and purchasing discipline, the operation became more predictable, responsive, and capable of supporting sustained business growth.

Looking to Improve Inventory Performance?

If your company is facing stockouts, excess inventory, or purchasing challenges, we can help identify practical opportunities to improve inventory performance, increase product availability, and support business growth.