Significant amounts of cash are tied up in obsolete stock, the level of obsolete stock on hand is unknown and is also untraceable.
Sirius implemented the Afinitis 2019 system to give a better understanding of the stock profile. Using this system a weekly list is compiled of items that have not sold in over a year. The ability to forecast potentially obsolete items with stagnating sales enables efficient stock management. Specific areas of the warehouse floor are set aside for slow moving/obsolete stock and fast moving high turnover items are given prime locations closer to packing and shipping areas.
Analysis of the obsolete stock data enables a customer profile to be created and turned into a targeted customer specific marketing campaign for remaining items of a similar type. The resulting sales turn obsolete stock into cash on hand. The cash generated is then available to invest in core products increasing profitability.
In addition lean six sigma theory is used to reduce the amount of waste held in inventory. When supply is more than demand the stock profile is streamlined. Monitoring slow-moving stock increases the ability to offload products before they are obsolete. This system mitigates the risk of items being left in storage, taking up space and tying up cash.
Not tracking sales data in terms of the amount and frequency of the customers spending results in the inability to keep track of lost custom.
Sirius uses the Afinitis 2019 system to analyse an existing database to establish a list of customers who have failed to spend or whose sales are in stark decline compared to the previous twelve month period. Monitoring the ratio of new to lost customers, who is spending and on what, enables lost customers to be identified and specifically targeted.
Using the list of lost customers generated by the system, relationships are re established and a sales strategy is formulated. Additional products that compliment previous purchases are recommended. This proactive approach with potentially lost customers increases both customer retention and bottom line sales.
After working hard to gain the customer initially, it made no sense to let that relationship lapse. Monitoring and nurturing customers that are showing a decline in expenditure before they stop spending means sales opportunities from the existing customer base are maximised.
Reasons for returns.
Returned products are not being analysed to establish trends in the type of product or reason for return. Not monitoring returns in this manner means there is no way to reduce the number of returned items.
Using lean six sigma theory to eliminate the waste of processing defects enables more efficient warehouse processes and reduces the need for non-value-added tasks.
Having a more streamlined method for dealing with returns enables specific problems to be identified and rectified. The same product type being returned had previously been unnoticed however a high frequency of the same product being categorised as faulty indicates a common fault. Establishing common faults enables a solution to be implemented. In this case a top heavy machine being damaged in transit was the major factor in the products return. Simply using a bespoke courier for specialist transport enables a reduction in returns of this type.
Quality issues are also highlighted using the new system, enabling better communication with suppliers and in turn further improving third party production and quality control processes.
Confusion over components is another area subject to increasing returned goods. Products with multiple packages to their consignment are prone to miss shipping or parts being lost in transit. Identifying the problem products leads to a more accurate labelling and shipping process being implemented.
The overall profitability of the company is increased and waste is reduced by the implementation of lean six sigma theory.
Targeted marketing campaigns
Having one marketing strategy for all customers in a market place with diverse and varied customers is ineffective. Generic campaigns lead to wasted resources and products not being bought to the attention of the correct customers.
Implementing the Afinitis 2019 system, customers can be segmented into different areas, industries and geographical locations. Analysing product ranges and profiling the customers most frequently purchasing products from set areas enables a database to be compiled. A database of customers and their specific spending trends enables marketing to be targeted and sales increased.
By analysing the customer and product data, the length of time they have been in using certain products is traceable. This information is then used to proactively contact a customer when the existing product reaches the end of its serviceable life or an upgraded version is available. Using the information to market products of interest to customers using like products increases efficiency of marketing and reduces non-value adding tasks.
Targeted marketing based on database information also allows add selling opportunities of complimentary products and accessories that are easily missed in generic marketing.
Warehouse Layout and efficiency
Warehouse space is at a premium and storage of products is disorganised with no structure, items are located wherever they fit with no organisational system.
Sirius analyse products and process to establish the most popular items in stock. Establishing the top selling items allows the prioritising of these products, locating them closest to the picking areas in a fast pack zone and sending items for order fulfilment directly to packing enables more efficient processing. Items not for orders or on the fast pick processing list are sent to the racking for location.
Grouping products in the racking by type enables faster processing times as the products are easier to locate and pick from their specific storage areas. Also grouping items with multiple cartons per product next to each other reduces the frequency of picking errors and again makes them easier to find when picking orders.
Using lean six sigma methodology reduces waste in a process. Transformation time is reduced by picking items for orders direct from containers and movement time is reduced by locating items in areas more relevant to their level of ordering. By increasing the speed of the warehousing process customers receive goods more quickly and with a lower chance of errors.