As the newly hired CFO of a company that specialized in the design, validation and build of computing platforms, this client faced a big task.
"We knew our inventory levels were high and the excess was coming at the expense of our working capital," said the client. “Our internal staff was stretched thin and we needed help—someone with deep supply chain and inventory management experience who could jump in and tackle the job without a lot of handholding."
Effective inventory management was complicated by the fact that the company provides its customers' long-term life cycle management support on many of their technology components. "Our inventory changes couldn't compromise our ability to meet the lifecycle management needs of our customers," the CFO stressed.
Patina was poised to step in, led by an expert in inventory and supply chain management with nearly three decades of experience, Keith. "He had a track record of addressing our exact challenges at other companies," said the client.
The Patina team conducted an extensive tour of the client's facilities, interviewed staff and gained a comprehensive understanding of the different inventory management models being used to drive materials management. "We maintain data in multiple systems across the company and Patina was able to compile this data into meaningful, actionable reports," the CFO said. "That was no easy task."
Patina used this information to develop a gap analysis and suggested inventory be allocated using an ABC strategy, which balanced the cost and volume of inventory items. The philosophy was, "You never want to halt production because you don't have enough two-cent screws and you also don’t want to automatically order a $3,000 part that you might not need again."
To enhance inventory management, Patina offered revisions to the client's cycle counting process. This led to more accurate inventory counts and eliminated time-consuming year-end physical inventory counts, which require the client to shut down the entire plant for several days during a very busy period. Patina also recommended best practices to enhance the client's documentation systems.
"Patina forced us to take a hard look at our inventory to identify anything that was excess and obsolete so we could account for it in our reserves," the client said.
Thanks to Patina, the company was able to reduce inventory levels by 15%—over a $2 million drop with direct impact to working capital.
"Patina helped enhance our working capital position by reducing our inventory levels," the client said. "They knew the right steps to take and the right people to draw on. He came in and delivered a laser beam focus. We got better results, much quicker, than we ever could have in-house. When you hire Patina, you know the work will be done correctly and managed tightly. It was a good fit all around."