Case Study
Leading Global Medical Device Manufacturer Reduces Operating Costs Through Inventory Optimization and Streamlined Production and Distribution Processes
700
BPS EBITDA Margin Improvement
Strategic Imperative
To optimize inventory management and logistics processes, thereby reducing finished-goods inventory by 10% and significantly improving operational efficiency and productivity
Client Background
- Medical device division of a billion-dollar global technology company serving international healthcare markets through specialized products and supplies
- Scope covered production planning, finished-goods inventory, shipping logistics, distribution costs, and SKU portfolio management
- Broad health-related product portfolio created substantial SKU complexity across production, inventory, shipping, and distribution operations
- Leadership faced mounting pressure to improve operational efficiency and reduce costs across manufacturing and distribution
- Stronger planning and logistics capabilities were critical to improving cash flow, productivity, and EBITDA performance
- Finished-goods inventory, freight expense, and shipping labor costs all remained above acceptable levels
Key Issues & Barriers
- Revenue planning was not effectively linked to production schedules and finished-goods decisions, driving excess inventory
- Distribution strategies were not optimized for cost, contributing to elevated freight expense across the network
- Shipping and handling processes required excessive labor, creating avoidable annual costs and weakening productivity
- Manual workflows and outdated information systems limited accurate production scheduling and finished-goods inventory control
- SKU proliferation complicated forecasting, scheduling, inventory requirements, and efficient product handling across operations
Key Implementation Components
- Implemented a centralized Production Planning and Inventory Control function to coordinate forecasting, scheduling, and finished-goods decisions
- Linked revenue planning directly to production scheduling and inventory management to align output with demand
- Rationalized SKU offerings to simplify forecasting, production scheduling, inventory requirements, and product handling
- Optimized distribution strategies to reduce freight expense while maintaining service requirements across the network
- Streamlined shipping and handling procedures to improve labor productivity and lower annual shipping costs
Benefits & Results
700 BPS
EBITDA Margin Improvement
20%
Annual Freight Cost Reduction
28%
Labor Cost Reduction
11%
Finished-Goods Inventory Reduction