Case study · Manufacturing
HVAC maker saves $14M through inventory management while meeting big-box service terms
To win a big-box retail contract, a heating, cooling and water heating producer had to serve more than 2,000 stores with four-hour service in major markets. USC modeled its North American distribution network and inventory strategy.
Results
$14M
in savings from better inventory management
The network met the retailer's required service level.
The situation
The company had just won a potentially lucrative contract with a high-profile big-box retailer. Meeting its service terms meant revamping North American warehousing and distribution to support more than 2,000 stores and hundreds of installation contractors, with four-hour service in every major metropolitan market.
What the assessment found
- Product records in disarray across brands and item numbers
- No model linking demand, inventory and delivery costs
How the work was done
Data: clean up and forecast
Standardized item numbers across brands, compiled retail sales data and forecast growth at one, three and five years to place preliminary distribution points.
Network: model the footprint
Built a dynamic logistics and distribution model to find the number and location of distribution centers that met the retailer's terms at lowest cost.
Costs: price every option
Defined storage and outbound costs by region and linked them to each location option, with a master file of truck-loading dimensions and weights.
$14M
in savings from better inventory management
“All in all, USCCG delivered an executable plan with a high probability of success.”
Lasting impact
The network met the retailer's required service level at minimum cost, the company became the retailer's preferred HVAC systems supplier, and it kept a modeling tool for future inventory and delivery decisions.
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