Global Consumer Electronics Manufacturer: VMI Transformation — 30 to 2 Days of Inventory

The Challenge

A global consumer electronics and automotive components manufacturer with operations across 3 North American divisions was running a 200,000 sq ft raw materials warehouse that had devolved into chaos. The facility was unmanned, unlabeled, and unsupervised — it didn't even display the company name. Twice a day, someone drove a company truck to pick up materials for the next four production shifts. Inventory sat at 30 days on hand, yet stock-outs were constant. The root cause: nothing was collocated, locations weren't identified, there was no cycle counting, and ERP system inventories were wildly inaccurate due to input errors. Materials that already existed in the building were being re-purchased because no one could find them. Corrugated packaging was mislabeled, scattered across different ends of the building, and in some cases segregated from its matching components. The mindset was "out of sight, out of mind — just buy more and leave."

Our Approach

A complete warehouse transformation was executed. A supervisor and two dedicated personnel were assigned to the facility. A comprehensive rack system was installed, and every location was assigned RFID labels. All materials were collocated by product family and arranged logically within the facility. A PFEP (Plan For Every Part) was created, and material maps were developed so any team member could locate any component within minutes. Cycle counts were implemented and maintained at 99.9% accuracy. Visual management boards were established to assign accountability for material allocation. A formal pull system was built between the plant and the distribution facility, replacing the ad-hoc truck runs. Vendor-managed inventory programs were negotiated with key suppliers, shifting the replenishment burden to suppliers who maintained contracted quantities against calculated demand. Standard work was established for every process in the facility.

Measurable Results

• Inventory reduced from 30 Days on Hand to 2 DOH — a 93% reduction
• Stock-outs completely eliminated through pull system between plant and distribution facility
• Cycle count accuracy achieved and sustained at 99.9%
• $42K annual savings in warehouse and manufacturing supplies through sourcing and negotiation
• 5S layout and pull processes established across distribution facility feeding 3 NA divisions
• RFID labeling, rack systems, material maps, and standard work implemented from scratch
• Facility transformed from unmanned chaos to a model distribution operation