A Case Study on Safety Stock Management
for a South American Manufacturer
Situation
A leading South American manufacturer specializing in high-quality components for various industries faced a critical challenge: ensuring a consistent supply of parts to their OEM customers in the United States. With growing demand and pressure to maintain a reliable supply chain, the manufacturer struggled with international logistics issues such as shipping delays and fluctuating lead times.
Their inability to maintain local stock in the U.S. meant they were often overlooked for new business opportunities. U.S.-based OEM customers were hesitant to engage due to concerns about long lead times and potential supply disruptions from an international source. The manufacturer needed a partner to establish a safety stock program, providing a reliable inventory buffer to mitigate risks, reduce lead times, and enhance their competitiveness in the U.S. market.
Action
Group O developed a comprehensive solution that involved importing and warehousing parts in Rock Island, IL. We established a safety stock program designed to provide the manufacturer with a reliable inventory buffer, preventing stockouts and enabling them to offer U.S.-based stock to prospective customers. By accurately forecasting demand, setting optimal inventory levels, and developing a replenishment schedule, we ensured continuous supply, reduced lead times, and improved the manufacturer’s competitiveness in the U.S. market.
Our team managed the entire process, from coordinating with the manufacturer on shipping schedules to implementing a state-of-the-art inventory management system in our Rock Island facility. The advanced system allowed us to monitor stock levels in real-time and adjust inventory as needed to meet customer demand. This seamless coordination ensured that the manufacturer’s U.S. customers experienced no disruptions in supply, positioning the manufacturer for new business opportunities.
Results
Since implementing the safety stock program, the manufacturer has experienced significant improvements in supply chain stability and business growth. The risk of stockouts has been greatly reduced, leading to higher customer satisfaction. With U.S.-based stock readily available, the manufacturer became more competitive, gaining access to new business opportunities that were previously out of reach. Additionally, our efficient inventory management and logistics solutions resulted in operational cost savings, further enhancing their position in the U.S. market.
By partnering with Group O, the South American manufacturer successfully navigated the complexities of international supply chain management, overcoming a critical barrier to growth. The establishment of a safety stock program not only ensured a steady supply of parts to their U.S. customers but also opened doors to new business opportunities, underscoring the value of strategic inventory management in market expansion. Here are some of the highlights our client experienced:
Supply Chain Stability: Therisk of stockouts has been reduced by 80%, ensuring consistent availability of parts to OEM customers. Previously, the manufacturer faced an average of 5 stockouts per month, which has now decreased to just 1 stockout every two months.
Operational Cost Savings: The implementation of efficient inventory management and logistics solutions has led to a 15% reduction in operational costs related to warehousing and transportation. This includes savings on expedited shipping fees and reduced inventory holding costs due to better demand forecasting and inventory turnover.
Customer Satisfaction: Customer satisfaction scores have increased by 30%, as measured by customer feedback surveys. The ability to provide U.S.-based stock has resulted in faster delivery times, reducing lead times from an average of 20 days to 5 days.
New Business Opportunities: The manufacturer has gained access to 3 new OEM customers in the U.S. market, which were previously unattainable due to concerns over supply chain reliability. This expansion has contributed to a 20% increase in revenue over the past year.
Market Competitiveness: By having U.S. stock readily available, the manufacturer has improved its market competitiveness, reflected in a 25% increase in market share in the U.S. over the past year.
In the Words of Our Client
"The safety stock program has been a game-changer for us. The assurance of supply has allowed us to build stronger relationships with our OEM customers in the U.S. and has opened new business opportunities. We are extremely satisfied with the level of service and expertise provided." — [Argentinian Manufacturer]
