Inventory Reduction by 23% in a Construction Wholesaler
We implemented a demand forecasting system based on seasonal trends. We eliminated 412 products that hadn't sold once in the last half-year.
At the Bud-Max wholesaler, goods lingered on shelves for months, blocking cash needed for current payments. We changed the way products were ordered, basing it on hard sales data instead of the buyer's intuition.
The challenge
In October 2023, the company struggled with a lack of financial liquidity. Analysis showed that 412 specific products had not left the warehouse for over 184 days. In total, 347,800 zł was frozen in goods that completely did not rotate. The owner had to use a revolving credit line for daily expenses, even though the warehouse was bursting at the seams with unsold materials.
Our approach
Dariusz Mazur conducted a thorough audit of the ERP database for the last 3 years. We checked every stock issue and receipt document to catch dead stock items. We divided the assortment into 3 groups according to real margin and sales speed. It turned out that 14% of the warehouse space was occupied by things that since 2022 generated only storage and insurance costs.
The solution
We created a demand forecasting model tailored to the seasonality of the construction industry in the Radom region. We introduced an automatic alert system for the purchasing department when stock levels exceeded 45 days of forecasted sales. We also implemented a fast clearance procedure for end-of-series items, which allowed for immediate recovery of some capital and freeing up space for high-margin goods.
Results
Within 92 days of operation, the wholesaler regained liquidity and significantly simplified internal logistics. This much stays in the pocket: over 81 thousand zlotys of freed-up cash in the first quarter after the changes. Numbers don't lie – less stock on hand means more money in the account.
Timeline
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October 2023ERP database audit and identification of 412 dead goods lying over 6 months.
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November 2023Implementation of new order limits and moving average algorithm.
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December 2023Clearance sale of lingering products and physical cleaning of racks.
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February 2024Final results verification and liquidity stabilization without revolving credit.
"I always thought a wide range was essential. Dariusz Mazur showed me through numbers that 412 products were just eating my profits. We recovered 81,340 zł in one quarter and I finally have order in the papers."