Kormac Insights
Category Management
Reducing Annualized Material Costs
Behind every margin challenge lies an opportunity to rethink, realign, and strengthen operations. We recently partnered with a global distributor of engineered components to address margin erosion and lost sales due to inefficiencies across its supply chain, procurement, warehouse operations, and logistics. We jointly realigned these functions and established processes supporting strategic market growth:
• Mapped Supply Chain systems and Logistics processes; interviewed stakeholders to prioritize needs, challenges, and opportunities
• Developed and implemented Procurement Sourcing tools and Category Management strategies; institutionalized methodology for scale
• Implemented custom Inventory Classification criteria to support unique client business model
• Developed and implemented robust Replenishment Process based on historical use, classification, and lead times
• Integrated Replenishment Process with Warehouse Hub & Spoke system to reduce total inventory, stockouts, and procurement cycles
• Completed implementation of MRP system, automating Sales/P.O. processing
• Established Strategic Customer procurement process
• Developed 18 KPI dashboard elements to measure and manage overall performance (OTIF) and provide insight into associated levers
• Created and implemented over 20 Standard Operating Procedures covering sales, supply chain, procurement, and data management, providing the foundation for SIOP implementation
• Developed client staff through interim leadership
Our shared results:
⬇️ 20% reduction in annualized material costs through strategic sourcing events across six product categories (2,700+ parts)
⬇️ 65% reduction in past-due P.O. value
⬆️ 50% improvement in customer fill rate through Global Demand Management Replenishment Model enhancement
⬇️ 18% reduction in working capital inventory through the development/implementation of Hub & Spoke Warehouse model
⬇️ 40% reduction in sales backlog through integration of advanced sales planning analytics and supply chain replenishment tools
For more on supply chain improvement: