You don’t get if you don’t ask.

Situation
An aluminum die casting operation was purchasing primary ingot from two sources. Deliveries were received according to schedules determined months in advance. Because of fluctuating releases from their automotive customers and unpredictable casting schedules, this company had accumulated a raw material inventory valued at about $1,000,000.

Our Approach
We worked with purchasing and production control teams to devise a way to dramatically reduce this working capital as well as the time-consuming daily physical inventory. While the company believed they already had the best deal possible with their suppliers, they accepted a goal to design the perfect process. Through creative thinking and interdepartmental cooperation, the team challenged their suppliers to propose an innovative raw material consignment program.

Results
The suppliers competed aggressively with one another, resulting in a consignment program which eliminated working capital investment in ingot, generated $1,000,000 in cash flow, reduced the price of raw material, and significantly reduced the company’s physical inventory burden.