Inventory Cost Reduction
Inventory Cost Reduction and Inventory Turns go hand in hand. By keenly focusing attention on our clients’ Inventory Turns*, we are able to help them measure the true cost of their inventory levels. By increasing inventory turns – yet maintaining or improving service levels – Strategy3 is able to achieve Inventory Cost Reduction.
*Inventory Turns or Inventory Turnover is defined as the ratio which shows how many times a company’s inventory is turned (sold) and replaced over a period of time. Example: A company sells 360,000 widgets a year. On average, the company houses 90,000 widgets on-hand. Therefore, this company’s Inventory Turns calculation equals (360,000) / (90,000), or 4 Inventory Turns per year.
Statement of Work
Strategy3 led the purchasing team of a Beverage Distributor with $650MM+ in annual revenue to decrease inventory as a Percentage of Revenue from 13.4% to 11.4%. This decrease resulted in $13.67MM in inventory cost avoidance, while improving overall Customer Service Level from a baseline of 96.7% to 98.2%.