Case Study 5

Situation

A dairy customer was purchasing squeeze bottles. The plant’s minimum order quantity was larger than the dairy had available space to warehouse.

The issue

The dairy had to purchase quantities that were smaller than plant minimums. This subjected them to higher pricing and very long lead times. In order to account for the lead times, the plant had to build a 60 day buffer between reorder point and order placement.

Objective

Develop a program that takes the inventory off the dairy’s books, provides weekly delivery, and delivers a hard dollar cost savings.

Process

We designed a program that utilized efficient order quantities. We located a public warehouse along a major interstate near their facility. This allowed them to pick their product up on a weekly back-haul route.

Results

The customer now enjoys an 11% hard cost savings associated with larger order quantities. They have increased cash flow by paying only for what is picked up each week. They no longer have to store multiple truck-loads of inventory in their facility. ALNI manages the off-sight inventory to efficiently manage the re-ordering of product while ensuring the customer never runs out.