Taking Inventory (and Getting It under Control)

When increasing supplier lead-times and a need to reduce investment in inventory occurred at the same time, this defense contractor had a real challenge; a challenge that RESCO helped them overcome.

A defense contractor that develops microwave sub-systems for military equipment was experiencing long lead-times and production shutdowns due to late deliveries on a handful of items. At the same time, and in part due to these lead-times, they found themselves sitting on more and more inventory.

To overcome these twin challenges, the contractor began searching for a supplier that could more effectively manage the inventory and delivery schedules of these items. The problem was that the existing suppliers balked at speeding deliveries or holding additional inventory under the existing pricing structure. At the same time, most of the new suppliers the contractor approached were not willing to accommodate the tighter delivery schedules.

But RESCO thought that this was a problem that had a solution.

To get at that solution, we began by clearly defining the problem through a series of meetings with the contractor’s purchasing, production, and accounting departments. Using sales forecasts, factory lead-times, and safety stock provisions, RESCO developed a program to track the exact replenishment points required for each item. We also worked with existing suppliers to reduce lead-times and in some cases found new suppliers altogether. The results were encouraging. With better control on stock levels and some modest improvements on lead-times, production shutdowns were virtually eliminated and inventory levels reduced. In addition, RESCO’s new customer incurred no net increase in item costs.

What began as a contract to manage a few items has now grown to where RESCO is responsible for more than 30 different products for this defense contractor and has come to be considered one of its key suppliers.to the instrument and automatically read the liquid level.

Working with the customer’s engineering department, RESCO was provided with only hand drawings and rough schematics. Developing a solution was made even more difficult by the fact that the instrument could not be modified. So the solution had to interface and communicate with the existing hardware and software.

Our team went to work and produced a prototype tester, complete with the documentation and specification sheet the customer requested.

After the new tester was approved and released, RESCO has gone on to produce and ship more than 500 units to date. Best of all, because the cost of a service call has been reduced dramatically, our customer’s cost of designing and manufacturing the new tester has become almost irrelevant. For all intents and purposes, the ROI on the project was almost immediate.