Case Studies
Activity Based Costing
The Business Issue: Determine the real costs for a
regional distribution company in order to develop
optimum service offerings for its retail customers and
support its business expansion objectives.
The Assignment: Build and implement an Activity
Based Costing model which accurately reflects the
all-in costs associated with this client's service
offerings. Provide existing and potential customers
with companion templates that would enable them to
determine the business benefits and value of doing
business with this client. Use findings to reinforce
the client's sales and marketing messages.
The Results: By being able to provide more accurate
and verifiable cost metrics, this client immediately
added four new customers, as well as reinforcing its
cost advantage with existing customers. Areas for
cost improvement were also identified and
documented which could further enhance its market
position.
Recapture Excess Inventory Dollars
The Business Issue: This retailer had an average DC
replenishment time of seven days from date of order,
while maintaining stock levels at 16 - 18 days supply.
Management wanted to recapture as much of that
excess inventory investment as possible through
more efficient and effective procurement and
replenishment process, with creating a negative
impact on customer availability in its stores.
The Assignment: Determine the optimum inventory
levels in the chain's DCs to maintain and/or improve
store service levels. Review store level demand data
and DC lead times to refine the forecasting, store
ordering, procurement and replenishment business
policies and processes to achieve optimal
performance. Recapture excess inventory investment
dollars for reinvestment in stores.
The Results: BSG identified $90 million in inventory
savings in the chain's DCs by aligning its days supply
more closely with its suppliers' average
replenishment cycles. As an added value it was
determined that by applying the same logic to the
retailer's store inventories (representing
approximately 60% of its chain-wide inventory), it
would be possible to capture an additional $120
million in inventory savings, without adversely
impacting customer service levels.
The Business Issue: Determine the real costs for a
regional distribution company in order to develop
optimum service offerings for its retail customers and
support its business expansion objectives.
The Assignment: Build and implement an Activity
Based Costing model which accurately reflects the
all-in costs associated with this client's service
offerings. Provide existing and potential customers
with companion templates that would enable them to
determine the business benefits and value of doing
business with this client. Use findings to reinforce
the client's sales and marketing messages.
The Results: By being able to provide more accurate
and verifiable cost metrics, this client immediately
added four new customers, as well as reinforcing its
cost advantage with existing customers. Areas for
cost improvement were also identified and
documented which could further enhance its market
position.
Recapture Excess Inventory Dollars
The Business Issue: This retailer had an average DC
replenishment time of seven days from date of order,
while maintaining stock levels at 16 - 18 days supply.
Management wanted to recapture as much of that
excess inventory investment as possible through
more efficient and effective procurement and
replenishment process, with creating a negative
impact on customer availability in its stores.
The Assignment: Determine the optimum inventory
levels in the chain's DCs to maintain and/or improve
store service levels. Review store level demand data
and DC lead times to refine the forecasting, store
ordering, procurement and replenishment business
policies and processes to achieve optimal
performance. Recapture excess inventory investment
dollars for reinvestment in stores.
The Results: BSG identified $90 million in inventory
savings in the chain's DCs by aligning its days supply
more closely with its suppliers' average
replenishment cycles. As an added value it was
determined that by applying the same logic to the
retailer's store inventories (representing
approximately 60% of its chain-wide inventory), it
would be possible to capture an additional $120
million in inventory savings, without adversely
impacting customer service levels.
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| Founding Member The Retail Coalition A Winning Combination |
| Founding Member The BSG Retail Coalition Retail Optimization Specialists |
| or (904) 509-2894 |