Shorter lead times and 30% inventory reduction
About Fagersta Stainless
Fagersta Stainless is a business unit in global stainless steel group Outokumpu, and a leading producer of stainless wire rod and drawn wire. Fagersta serves customers wordwide and has a reputation of delivering high quality throughout the value chain.
Service: Cash release through inventory optimization
The client operates in a traditional, cost-driven industry with a highly competitive business environment. A history of declining sales volumes in combination with the outbreak of the Covid-19 pandemic quickly led to inventory build-up, resulting in capital tie-up and a need for reduction of stock levels. As in most process industries, factory utilization was of great importance in order to maintain profitability, and the decrease of demand had led to a need for increased flexibility and shortened lead-times to capture higher customer value.
Steel as a raw material comes in a variety of grades, and suppliers required purchases to be made in large bulk sizes, charges. This led to challenging inventory steering, since steel grades and products were often highly customized. Customer MOQ’s (Minimum order quantities) and the complex production process made it difficult to optimize raw material inventory. With a decrease of customer demand and a high share of customer dedicated inventory, lower product availability, high stock levels and finished goods inventory.
"As a result of the project, the organization learned to constantly evaluate our ways of working, which was especially important in the dramatic market changes caused by the Covid-19 pandemic"
Mats Benson, General Manager
Scope: Increasing efficiency of logistics and planning system, with resulting inventory reduction and cash release.
The first step was to analyze inventory flows and simulate the effects of changed ordering processes on delivery precision and stock levels, as well as identify and realize quick-wins. This was done through
The Capacent consultants did a great job managing the project and implementation with focus, a hands-on approach and speed – which is why we can see the results today. We needed to do a fast and focused project, and needed to add analytical power that was lacking in the company.
Do you want to know more about how we can support your journey towards improving your working capital?
Erik Påhlson is Managing Director and Working Capital Lead at Capacent_x in Sweden. Book a meeting below to discuss how we can support your journey or request a free WCM benchmark analysis to compare yourself to your competitors.
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