Inventory Management - Crossdocking Optimization
Project Info:
The project was conducted for the largest distribution company in Georgia. The primary goal was to eliminate unnecessary warehouse costs, reduce out-of-stock (OOS) rates, improve inventory management, and minimize waste from damaged or expired goods. Initially, the company operated four warehouses, with significant inefficiencies in replenishing remote locations.
Challenge:
High warehouse operational costs, including rent, staffing, and inventory management.
Inefficient replenishment of remote warehouses, causing unplanned deliveries.
30% out-of-stock (OOS) rate on orders, leading to lost sales and inefficiencies.
High inventory waste due to poor management, causing damage and expiration.
Extra headcount requirements for warehouse management.
Solution:
To address these issues, we introduced a centralized warehouse system supported by one regional warehouse and a crossdocking model:
Eliminated two warehouses, reducing unnecessary storage costs.
Implemented a crossdocking system where delivery trucks were replenished every morning with orders for their respective regions.
The supporting warehouse was replenished biweekly or weekly, depending on seasonal demand.
Streamlined inventory management to minimize waste and improve efficiency.
Result:
- Eliminated two warehouses, saving 28,600 USD per month and 343,200 GEL annually.
- One-time inventory savings of 88,000 USD from warehouse inventory and racking costs.
- 95% reduction in out-of-stock issues, ensuring product availability.
- 80% decrease in inventory waste from damaged and expired goods.
- Improved operational efficiency with a leaner warehouse network.
This transformation significantly reduced costs, optimized logistics, and improved service levels across the supply chain.